Drumbeat: December 4, 2009

Planet Earth is in imminent peril. We now have clear evidence of the crisis, provided by increasingly detailed information about how Earth responded to perturbing forces during its history and by observations of changes that are beginning to occur around the globe. The startling conclusion is that continued exploitation of all fossil fuels on Earth threatens not only the other millions of species on the planet but also the survival of humanity itself—and the timetable is shorter than we thought.

I believe the biggest obstacle to solving global warming is the role of money in politics, the undue sway of special interests. "But the influence of special interests is impossible to stop," you say. It had better not be. But the public, and young people in particular, will need to get involved in a major way.

The Mexican government has stated its intention to reduce the funds allocated to state owned Petróleos Mexicanos for development of the Chicontepec oil field by 63%. The budgetary cut makes the future of the underperforming project increasingly bleak. Disillusioned with poor results, execution and technological limitations, lawmakers have reduced next year's budget for the project to $1.61 billion, down from $4.4 billion allocated for 2009.

Nigeria's controversial oil reform bill is likely to make it easier for more foreign oil companies to compete for lucrative oil and gas contracts in Africa's biggest energy producer, a top industry official said.

Natural gas futures for delivery at the Henry Hub in Louisiana have fallen 19 percent this year to $4.566 a million British thermal units on the New York Mercantile Exchange. Prices sank as low as $2.409 in September.

TER: But if we're going from under $80 today to back over $100, that's way more than inflation. Isn't that a supply problem?

RW: If supplies get used up, if the economies in Asia hang on, and if the U.S. doesn't get much worse than it is, we should probably get up to $100. This will be very difficult to evaluate because the International Agency for Oil and Energy—the group that measures oil—is forecasting U.S. demand for next year to go down 1%. Supplies being where they are, there will probably be a cap on price. But if you're looking at a situation where inflation steps up considerably, the price could easily go from $80 to $100 based on inflation alone because the dollar is worth less. It's not that the fundamentals are that much different; it's just that the dollar is cheaper. December is historically the worst and weakest month for the U.S. Dollar.

The oil services industry's third-quarter results were respectable considering the speed and violence of the downturn over the last year. In most cases, we saw some sequential improvement in North American revenue and margins, thanks to a 13% sequential gain in the North American rig count and a seasonal bounce in Canadian activity. Overall, we believe the North American recovery is very fragile, as near-term oil demand and natural gas supply issues can easily shatter it. Internationally, we also saw the expected margin deterioration, which was led by contract resets, and a challenging Mexican market. Mexico was particularly weak this quarter, as flooding in the Northern and Central regions of the Chicontepec field reduced activity levels as well as the number of highly profitable well completions. In addition, Pemex is considering reworking both existing contracts and future awards to modify the services companies' incentives toward boosting oil production after the Chicontepec field badly missed annual production targets. After reviewing the industry's third-quarter reports, we present our key takeaways.

DHAHRAN -- Saudi Aramco has issued an overview of measures taken to safeguard the marine habitats close to its shallow-water Manifa field development in the Arabian Gulf.

Manifa is the company’s largest offshore project to date, designed to deliver 900,000 b/d of heavy crude, 900 MMcf/d of associated gas, and 65,000 b/d of condensate. Development started in 2006, and is due to be completed in 2015. By mid-2009, Aramco adds, all platform jackets had been installed. The project also involves constructing a 41-km (25-mi) causeway, with 27 artificial drilling islands.

Manifa Bay contains extensive algal habitats and thick beds of sea-grass that provide a primary source of nutrition for marine life. It is also the habitat of pearl oysters, the hamour fish, crabs, dolphins, shrimp, and sea turtles, including the endangered Hawksbill turtle.

The Obama administration has missed an opportunity at its jobs summit by not actively engaging the oil and natural gas industry – an industry that supports 9.2 million American jobs and is poised to create hundreds of thousands of new jobs with the right public policies.

(Bloomberg) -- Palm oil climbed to the highest level in six months after analysts predicted prices may increase 20 percent in the first half of next year as drought disrupts supplies and demand grows in China and India, the biggest users.

Summary: In this captivating tale, we accompany Cornucopian Man and his faithful side-kick, Economics-Professor Boy, as they battle the confidence-destroying forces of Biophysical Reality. In today’s adventure, our heroes try to stop the nefarious villains from spilling pure Truth onto (gasp!) the front page of the New York Times. It’s a riveting story rife with rollicking adventure, knee-slapping humor, and some ‘deep thought’ to boot! -- So please join Cornucopian Man as he fights to save “Businessssss aaaaaaaaas USUAL!!!!!!”

It’s instructive to compare the resulting brouhaha to the parallel, if much less heavily publicized, debate over peak oil. The peak oil scene has certainly seen its share of overblown apocalyptic claims, and it certainly has its own breed of deniers, who insist that the free market, the march of progress, or some other conveniently unquantifiable factor will make infinite material expansion on a finite planet less of an oxymoron than all logic and evidence suggests it will be. Still, most of the action in the peak oil scene nowadays is happening in the wide spectrum between these two extremes. We’ve got ecogeeks pushing alternative energy, Transition Towners building local communities, “preppers” learning survival skills, and more; even if most of these ventures miss their mark, as doubtless most of them will, the chance of finding useful strategies for a difficult future goes up with each alternative explored.

"Expensive oil may mean the end of life as we know it, but maybe that life wasn't particularly great to start with," Rubin writes. "Smog-congested cities, global warming, oil slicks and other forms of environmental degradation are all part of the legacy of cheap oil."

When exactly the serious oil shocks Rubin warns of will occur is unclear, but what is clear is that the trade advantages of cheap labour in developing nations will disappear when transportation costs start to skyrocket.

The Texas Department of Transportation is starting to explore a driver mileage tax as an alternative to the state gasoline tax, in the face of dwindling highway funds that will become depleted in 2012.

In late November, the Texas Transportation Commission laid groundwork for a Highway User Fee Exploratory Committee that would begin meeting in March and draft a report by August, a few months before state lawmakers convene.

Our energy dilemma stirs lots of questions but few solutions. In "Who Turned Out the Lights: Your Guided Tour to the Energy Crisis," published by Harper in October, Scott Bittle and Jean Johnson look for answers that will sustain the country through shifting economic conditions. Bittle is executive editor of PublicAgenda.org. Johnson is a co-founder of PublicAgenda.com.

With one of the largest deployments in North America of smart meters and time-of-use (ToU) rates for all of its customers, Toronto Hydro is a leader in the smart grid evolution -- and that's energizing many of the city's businesses to plug in to all the opportunities the smart grid has to offer, as well as to do their part in energy conservation.

ISLAMABAD: Environment agencies and experts have expressed serious concern over government’s plan to purchase 30 million energy-saver bulbs at higher than market prices and distribute them across the country.

According to them, the energy savers or compact fluorescent lamps (CFLs) are not environment-friendly and pose health hazards.

LOS ANGELES — For the second year in a row, Green Car Journal has named a German diesel Green Car of the Year.

The 42-mpg Audi A3 TDI topped a field that included three hybrids and two diesels to take the award presented today at the Los Angeles Auto Show. The judges praised the cars “exceptional fuel economy and low emissions” and hailed it as “stylish” and “fun to drive.”

BioFields holds the rights to use "direct to ethanol" technology in Mexico. The method, developed and patented by the Algenol company, produces biofuel using hybrid blue-green algae, he explained.

The algae produce ethanol naturally, and the technique optimises the process so it can be done on an industrial scale. The ethanol produced can be mixed with gasoline in varying proportions, helping reduce emissions of greenhouse-effect gases generated by vehicles.

"The great success of this technology is that we found a type of algae that secretes ethanol naturally, saving two industrial steps: fermentation and synthesis into ethanol. This makes each microorganism a mini-factory," Ramírez said.

In the last week of November activists from the Global League of Activists, IndyACT, carried out a peaceful action in the Annual Conference of the Arab Forum for Environment and Development – AFED in Lebanon, to demand the Arab states for active participation in the United Nations climate negotiations in Copenhagen.

The group based in Beirut, Lebanon, urged members to not to be drawn behind the obstructive oil-rich Arab states in the negotiation process. In response to obstructives measures by Arab states, the group also launched the campaign and website: You Can’t Drink Oil.

When Winston Churchill became First Lord of the Admiralty 98 years ago he made a pivotal reform that assured the British navy's dominance of the waves during World War One.

The British fleet had been powered entirely by Welsh coal until 1911, a fuel that forced long and tiresome refuelling stops that forced warships into port and away from battle.

Churchill was looking for an answer.

He found one in oil. Fifty one years after a crazy Yankee known as Colonel Edwin Drake found black gold in Pennsylvania, Winston Churchill converted his fleet from coal to oil, a step that changed
war, peace and business for the rest of the 20th century.

Nearly a hundred years later the stuff is showing signs of running out.

Local and national governments have only 40 years to plan and build a zero carbon society if the world is to avoid catastrophic global warming, David Knight and Bob Whitmarsh warn.

Climate change and peak oil present planners with an enormous challenge. A national and international response, including some permutation of capping greenhouse gas emissions, carbon taxes and investing in clean energy, needs to be combined with bottom-up local and regional initiatives. Target setting is crucial. But at which targets should planners be aiming?

Michael Ruppert looks cornered in a gritty Los Angeles meat locker, ranting to an unseen documentarian and smoking as if there was no tomorrow.

And that's exactly his belief: There will be no tomorrow because of our alarming dependence on oil, which is about to dry up, and because our economic system has become one big pyramid scheme. Electric cars are a smoke screen, clean coal is a joke and ethanol is an even bigger joke. You better start saving organic seeds, because they'll be the real currency when (not if) the apocalypse hits.

Tell the truth now. You have a formal dining room but eat at the breakfast nook. The living room with the vaulted ceiling sits empty while everyone piles into the family room. That third bathroom doesn't get visited more than once a week.

There's a lot of space that just doesn't get used, despite the labor and material required to build it and the money you're spending to heat and cool it. Looking at it, of course, is free.

I was very pessimistic until last year about our prospects of weaning off fossil fuels before reaching an irreversible tipping point. Some positive feedback loop would kick in, like higher temperatures releasing trapped methane from arctic permafrost and seafloor sediments. Increased atmospheric methane, about 30 times as potent a greenhouse gas as CO2, would further raise temperatures. End result? Within a few decades Earth would be as hot as Venus. The whole of humanity would go the way of the civilisations described by Jared Diamond in Collapse, who could see they were on a track to self destruction but were unable to alter course.

In 2008 I read one of the most positive books ever written; The Singularity Is Near, by Ray Kurzweil. He points out that whichever way you measure the rate of technological change, it accelerates exponentially. Moore’s law for instance predicted in 1965 that artificial intelligence would double in complexity and halve in cost every two years. It’s held for the last 44 years, and if it continues to hold until 2020, we’ll then have machines approaching human intelligence.

(Bloomberg) -- Saudi Arabia, the biggest oil producer in the Organization of Petroleum Exporting Countries, said crude oil prices are satisfactory close to their current level of $75 a barrel.

Asked whether OPEC should raise production at its Dec. 22 meeting, Saudi Oil Minister Ali al-Naimi said: “We still have time, but right now the price is OK, between $70 and $80, close to the target, almost $75.”

Inventories of oil “are coming down,” he told reporters today in Cairo, before a meeting of Arab petroleum ministers. He declined to comment more on OPEC policy.

DUBAI/LONDON (Reuters) - OPEC is expected to hold output steady when it meets in Luanda at the end of this month, rounding off a year of stable production policy and of robust oil prices.

Oil inventories are brimming and any recovery in demand is expected to be slow, but international benchmark U.S. crude futures have more than doubled from just above $32 a barrel last December to above $76 now -- roughly the level OPEC has said is high enough for producers and not too high for the still delicate world economy.

"The oil price has not been the cause of surprise for us for some time, so there is really no need for OPEC to surprise the oil market," one OPEC delegate told Reuters.

(Bloomberg) -- ConocoPhillips, the third-largest U.S. oil company, will keep its stake in OAO Lukoil as it seeks to divest $10 billion in assets over the next two years.

The Houston-based company’s 20 percent stake in Russia’s second-largest oil producer is a “strategic asset” and won’t be sold, Chief Executive Officer Jim Mulva said in an interview at a conference in the Kazakh capital Astana today.

(Bloomberg) -- Colonial Pipeline Co., which operates the largest pipeline linking U.S. Gulf Coast refiners and East Coast markets, will limit shipments of gasoline because orders exceed the company’s ability to deliver fuel on time.

The Alpharetta, Georgia-based company issued the requirement, known as an allocation, in a bulletin to shippers for the 70th cycle. The restriction applies to shipments on Colonial pipelines north of Collins, Mississippi.

(Bloomberg) -- China Petroleum & Chemical Corp., the nation’s largest oil refiner, said its operations face risks and uncertainties next year because of volatile global crude prices and rising domestic chemical capacity.

Both the oil products and chemical businesses will face “fierce” competition and the first quarter of next year will be “arduous,” according to a statement today in the online newsletter of parent China Petrochemical Corp.

BEIJING (AP) — State-owned Sinopec Corp. said Friday it has signed a 20-year contract with Exxon Mobil Corp. to buy gas from Papua New Guinea, in the latest of a flurry of foreign deals to secure fuel for China's booming economy.

The liquefied natural gas will come from a project being developed by Exxon Mobil and other investors in Papua New Guinea's central highlands. Sinopec gave no financial details.

Just like many UK consumers were offered products to fix tariffs back in 2008 when natural gas prices were much higher — up until 2012 in some cases — so were industrial and commercial players.

Now, according to Nick Campbell, an analyst at energy consultancy Inenco — a firm that advises companies on how to manage their energy exposure — many companies have found themselves stuck with uncompetitive three-year deals fixed back in 2008 when prices were sometimes twice as high.

(Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest oil company, has sought a formal reassessment of the fuel remaining in New Zealand’s oldest gas field.

Shell and partner Todd Energy Ltd. have begun the process to re-determine the field’s outstanding reserves, customer Vector Ltd. said in a statement to the New Zealand stock exchange today. Vector has hired an international consultant and the parties will meet Feb. 3 on the issue, the Auckland-based company said.

(Bloomberg) -- Seadrill Ltd., the drilling company founded by billionaire John Fredriksen, said it’s unclear how long it will take to remove its fire-damaged West Atlas rig from the Montara field after it was formally condemned.

West Atlas caught fire on Nov. 1 along with PTT Exploration & Production Plc’s Montara wellhead platform off the Australian coast. The blaze broke out while trying to plug a leak by pumping heavy mud into the well, according to PTTEP Australasia.

(Bloomberg) -- Valero Energy Corp., the largest U.S. independent refiner, is looking to buy additional ethanol plants because they provide a good supplement to Valero’s business of producing gasoline, diesel and other fuels, Chief Executive Officer Bill Klesse said.

The San Antonio-based company, which bought ethanol plants from bankrupt producer VeraSun Energy Corp. earlier this year, will consider plants that are available at below their replacement cost, Klesse said in an interview at the Platts Global Energy Awards.

Is nuclear fusion the ultimate energy source, or the ultimate pipe dream? Millions upon millions of dollars are being spent to find out which answer is the right one. For some technologies, the answer could come sooner than later. For others, it may be later rather than sooner.

NEW YORK (Fortune) -- With just one more permit from the State of Colorado, Energy Fuels Resources Corporation founder and CEO George Glasier can break ground for the first new U.S. uranium mill since the Cold War.

Of course claims and reality can go off on different paths like Cain and Abel. The Tesla puts out no pollution and will rumble with Porsches off the line, but unlike a second- generation Prius, there are compromises.

Range on my test drive is disappointing. At a full charge of the lithium-ion batteries, the car’s digital monitor gives me an expected range of 203 miles, and then begins downgrading that number more quickly than stock in a newspaper conglomerate.

GENEVA (AFP) – The prototype of Solar Impulse, a pioneering Swiss bid to fly around the world on solar power, briefly took off for the first time on Thursday but under battery power, the organisers said.

The high tech single-seater with the wingspan of an Airbus A340 airliner (63.40 metres) made a controlled 400 metre (yard) flight about one metre above the runway at Duebendorf air base near the Swiss city of Zurich, said co-founders Bertrand Piccard and Andre Borschberg.

(Bloomberg) -- Clean Energy Factory Co., Japan’s fourth-biggest wind-farm operator, said it is in talks to hire Nomura Holdings Inc. to manage an initial share sale in late 2010 to help fund a plan to double capacity in five years.

The company known as CEF plans to raise as much as 10 billion yen ($115 million) and list the shares on the Tokyo Stock Exchange, President Hiroyuki Kamata, 49, said in an interview at his Tokyo office.

(Bloomberg) -- Christmas is a waste of money because people who give presents overestimate how much recipients will enjoy their offerings, economist Joel Waldfogel said.

“The way we celebrate Christmas around the developed world is with an orgy of value destruction that vaporizes $25 billion per year,” he said in a lecture in London yesterday. “People value the items they receive as gifts 20 percent less per dollar spent than the items they purchase for themselves. These are items that are not well-suited for their tastes.”

(Bloomberg) -- Across Uganda, thousands of women warm supper over new, $8 orange-painted stoves. The clay-and- metal pots burn about two-thirds the charcoal of the open-fire cooking typical of East Africa, where forests are being chopped down in the struggle to feed the region’s 125 million people.

Four thousand miles away, at the Charles Hurst Land Rover dealership in southwest London, a Range Rover Vogue sells for 90,000 pounds ($151,000). A blue windshield sticker proclaims that the gasoline-powered truck’s first 45,000 miles (72,421 kilometers) will be carbon neutral.

That’s because Land Rover, official purveyor of 4x4s to Queen Elizabeth II, is helping Ugandans cut their greenhouse gas emissions with those new stoves.

LONDON – The United Nations will conduct its own investigation into e-mails leaked from a leading British climate science center in addition to the probe by the University of East Anglia, a senior U.N. climate official said Friday.

"They are just reviewing the facts and (looking) into whether there is any validity to the specious claims, in my view, that are being made," he said in a phone interview Wednesday night. "That's exactly what they should be doing, and I am fully in support of that."

The Australian data comes in for particular criticism as the programmer discovers World Meteorological Organisation codes are missing, station names overlap and many co-ordinates are incorrect.

At one point the programmer writes about his attempts to make sense of the data. "What a bloody mess," he concludes. In another case, 30 years of data is attributed to a site at Cobar Airport but the frustrated programmer writes: "Now looking at the dates. something bad has happened ... COBAR AIRPORT AWS [automatic weather station] cannot start in 1962, it didn't open until 1993!"

In another he says: "Getting seriously fed up with the state of the Australian data ... so many false references ... so many changes ... bewildering."

In his book Chill, natural scientist Peter Taylor, warns that the world is cooling and that solutions proposed at Copenhagen ignore the risks of starvation, resource depletion, threats to ecosystems and a possible return of the Ice Age.

Here he explains his thinking:

Like a magician who fools themselves but not audience, the Anthropomorphic Global Warming (AGW) lobby have identified the wrong problem and the wrong solution. Global cooling threatens disaster for humanity in the developed and developing world alike, yet the media & the scientific consensus ignores this peril.

(Bloomberg) -- The 17,000 people visiting Denmark for global talks on reducing greenhouse gases will release as much carbon dioxide during the two-week event as about 200,000 U.S. passenger cars do in the period.

SYANGBOCHE, Nepal - Nepal's top politicians strapped on oxygen tanks Friday and held a Cabinet meeting amid the frigid, thin air of Mount Everest to highlight the danger global warming poses to glaciers, ahead of next week's international climate change talks.

The government billed the stunt as the world's highest Cabinet meeting. The ministers posed for pictures, signed a commitment to tighten environmental regulations and expand the nation's protected areas, and then quickly flew away.

OSLO (Reuters) - After two years of work, and 12 years after their last attempt, 190 nations gather in Copenhagen from Monday to try to avert dramatic climate change -- what one minister called "the most difficult talks ever embarked upon by humanity."

Already the sheer size of the measures needed, and splits between rich and poor about who should pay, mean that a historic U.N. pact to fight global warming and ease dependence on fossil fuels may be put off in favour of a less binding "declaration."

THE world has little chance of avoiding at least two degrees of global warming this century - the projected threshold for unpredictable and accelerated climate changes - if the emissions targets proposed by rich nations are locked in at next week's Copenhagen summit, an analysis has found.

A report by German-based consultants Climate Analytics says wealthy countries will arrive in Denmark with proposals that would lead to a joint cut in greenhouse gas emissions of between 13 and 20 per cent below 1990 levels by 2020.

Once again, following is what he said five years, but the key point is that the Saudis followed through on their pledge to try to bring oil prices down, when they significantly increased their net oil exports in 2004 & 2005, but then in early 2006 they were mysteriously unable to find buyers for all of their oil--even their light, sweet oil. I wonder what would have happened if they had offered to sell another one mbpd of light, sweet oil for $28 per barrel in early 2006?

Mr Al-Naimi said: "Saudi Arabia continues to be committed to OPEC's $22-28 price band. There are signs that worldwide inventories have begun to build but no one really knows for sure. I do not believe there is a fissure [within Opec]. There is dialogue. Opec in general is committed to the band," he said.

Another example of how the Chinese are dominating the resource acquisition game. Can you imagine the outrage from Joe6Pack if the US gov't, say thru the MMS, bought that NG from ExxonMobil. Right now there appears to be a flood of LNG reaching the market. Just like we currently have oil export capability exceeding demand. Neither condition will last. Of course, we can always fall back on all those trillions of cf of shale gas we have in the ground...once NG prices increase a couple of hundred percent..or more.

IMO, we are presently transitioning from voluntary + involuntary reductions in net oil exports this year to mostly involuntary reductions in net oil exports next year. The last EIA estimate I saw put the net decline in global demand in 2009 at only about 2% from the 2008 rate.

But in any case, as you know depletion marches on. IMO, a plausible estimate for the post-2005 global Cumulative Net Oil Exports (CNOE) depletion rate is in the 5% to 7% range, which puts us at 50% depleted between 2015 and 2019. At the 7%/year depletion rate, world oil importers will have burned through one-fourth of post-2005 CNOE in just four years, in the 2006-2009 inclusive time frame.

We found our largest Lower 48 oil field, the East Texas Field, in 1930, and the US (and especially the East Texas Field) was a primary source of oil for the Allies in the Second World War. By the time that a child born in 1930 had graduated from high school in 1948, the US had become a net oil importer (22 years before our production peaked). China showed the same pattern--slipping from net oil exporter status to net oil importer status even as their production increased.

I know I found the information shocking when I first saw it, about how long the US has been an oil importer. We were the world's largest producer of oil back then, but were still importing oil, so our consumption was considerably above production.

Here is a chart from the Energy Export Databrowser that plots the years 1965 to the present. It doesn't quite tell the story Debbie wanted but does show how our gradual rise in consumption combined with a decline in production have left us in our current situation.

Does anyone have recommendations for an open dataset that goes back to the early days of US oil production?

I have played with OPEC data which goes back to first production for most of the Middle Eastern nations but I haven't yet found a consolidated dataset for the US or other Western nations that I like. And there are so many places to look: EIA, Texas RR commission, USGS. Where would folks direct me to find production and consumption data that start at first production or at least 1900, whichever is earlier?

Huh? EIA has export/import data back to 1910 for crude oil, 1935/36 for gasoline/distillates:

Kind of a murky graph, but the exports show up clear enough. Remember that they are aligned to the right axis; I know, I misspelled "aligned," too... Imports of Finished Petroleum Products only goes back to 1984, nb. It would be easy enough to tease a larger data set using what's there, however. Basically the 60s and 70s saw very negligible exports. Lately they've really taken off. Shh, don't tell any Congresscritters...

Where to? Mexico, Netherlands, Singapore, Canada, Chile are the top 5:

As I understand it, Mexico doesn't have any refineries that produce low-sulfur diesel. So they send us oil, we produce low sulfur diesel, and pretty much ship it back. So net imports are probably what to look at for Mexico.

I personally think it is a simply superb situation to have a large value of currently uneconomical shale gas and marginally economical tar sands in close proximity, as these will be our energy lifeline as we hit the oil decline phase and are out-bid on the world market by exporting and developing nations.

A stair-case down, with enough energy left to do a meaningful shift to renewables, nukes, or whatever, is better than a cliff with rocks at the bottom.

I don't really expect peak oil to be acknowledged anytime soon due to obfuscation by economic factors, but as prices eventually rise there should be a point at which the marginal cost of production of these assets crosses the tolerable cost of consumption, and some sort of transition to renewables could result.

With a bit more luck oil investment will stay low long enough to cause a premature down-turn in production, and help this process along. Energy in the ground is the best asset the world can have, regardless of how it is preserved.

There's nothing "superb" about the impact of the tight-gas frackking process or the bitumen stripmine -n'-steam method on the fresh water supply.
I for one would choose food & water security over natgas or bitumen, and yes, the choice really does appear to be that simple.
All I can hope is that the Principle of Receding Horizons will render both of these Earth-rending techniques forever uneconomical.

Humans are not traditionally the sort to take the path of "safety and security" -- they'll minimize the perceived risk and take the simple short-term view on ROI. Shale gas and tar sands are both valuable enough and cheap enough that horizons won't protect them forever, IMHO. This is an admittedly qualitative view, though empirically I base it on the fact that investments and production growth were heavy just two years ago, when prices were not that terribly high (though stocks were declining then). Not much hint of environmental legislation either, and that was when such luxuries were more easily afforded than they will be in the future.

If it doesn't get used for heating homes and driving calls, it'll get used for industrial lubricants and plastics and such. $100/bbl and $7mcf might be a lot for a flagrantly wasteful economy, but it shouldn't be too much for an efficient one. If nothing else that energy will be used to build a round of wind turbines and solar cells.

True enough, but then two years ago investments and production growth in SUV's and McMansions were heavy too. The cheap money is gone, likely forever, and without it capitalizing slow-amortizing investments will become next to impossible. I hope.

Palso you describe what I think has been the Empire's plan all along - hang onto our own oil, while competing for the far-away stuff to keep the "wrong" people (serious competitors for our power) from getting too much of it, then as the world dieoff gets more serious and we have to pull inward, we've still got our stuff.

In this case by "we" when I talk about the Empire, I don't mean us here, I mean the decision makers, the owners and operators of the Empire. We here, we regular people, can die off in quantity; the owners/operators will have plenty of us to do the work even if half of us are gone, plus that within-the-fortress oil.

Question: How long can natural gas prices stay at the current level? How does price compare to production costs? Seems to me as if we are at or close to a bottom. At some point, won't consumers, especially businesses, start substituting natural gas for other energy sources?

I suspect that that's as a big a factor as the new shale plays. Industrial users are the biggest consumers of natural gas, and many of them have cut back or gone out of business. A shuttered factory doesn't need much fuel.

True about declining business demand playing a role, but if price is at or below production costs, certainly that situation can't continue regardless of demand. Also, I can forsee a growing demand by homeowners to be brought online to NG as the cost differential with oil continues or even widens. In my part of the country, there are neighborhoods with oil heat next to others with NG -- I expect the oil heated neighborhoods will be clamoring to be let into the NG fold. All in all, I just don't see how the status quo is sustainable.

I'm sure the status quo is not sustainable. But at this point, I don't think I'd make any predictions about where prices will go in the immediate future. Sure, the economy could recover, and prices could spike again.

OTOH, maybe the economy will get worse. The demand from homeowners will drop, because they'll be turning into ex-homeowners and moving in with relatives. People might want to switch from oil to natural gas, but that costs money, and people won't have it. Or if they do, they'll hesitate to make the switch, because a lot of people got burned doing that before the last price spike.

There's also our LNG terminals, which are sitting idle and sending their cargoes to the UK and other places. If consumption increases, we have the capacity to import more.

The whole issue of natural gas prices versus cost is one we have been discussing in a number of posts. This is a recent article I wrote on the subject: More Natural Gas Controversy.

There are a lot of issues with natural gas. The amount of natural gas we use cannot expand very rapidly, because to do so would require (1) more people to convert from oil to gas heating (in the North East), and appropriate winter storage capacity for this added, or (2) additional industrial use, or (3) a switch in electricity use from coal to natural gas. Coal is so cheap, it is hard for natural gas to compete with coal, unless it is terribly cheap. Perhaps at $3 mcf, not much above that.

The current natural gas prices reflect oversupply. Even a little bump in production is too much, when the system cannot handle much more. With the recession, industrial use is down, so that makes it worse.

On the production side, new shale gas techniques are producing more, and some producers have made the cost of production sound quite cheap--$4 mcf, for example. But when prices dropped, they sent drilling rigs away, leading a lot of folks to think they were fibbing. Also, there is a controversy about how long the new shale wells drilled will be producing economically. Arthur Berman thinks shale gas producers need a price of something like $9 mcf at the wellhead to be profitable, when one properly looks at long term economics.

In my view, natural gas at $9 mcf at the wellhead would be somewhat equivalent to $90 barrel oil--too expensive for the US to afford. (I convert at 10 to 1 rather than 6 to one, because this fits better with historical averages, and reflects the additional costs of natural gas delivery.) As Dave Murphy has shown, oil above $80 a barrel sends the US into a recession. It is hard to see why the same wouldn't be true for natural gas, since the same mechanism is at work--high prices leave too little left over for discretionary purchases.

So even with a long time horizon, it is not clear that natural gas will ever be able to rise to a price that will cover costs. At the price that is required, homeowners will find it too expensive to heat their homes, and electric utilities will find the cost of electricity terribly high (leading to extremely high costs for air conditioning), so the country will go further into recession, if we are to buy the properly -priced natural gas.

Not discounting at all your view on the competitiveness of NG vs coal, from this article Lower Natural-Gas Price Leaves Coal Out in Cold it would appear that NG is competitive with coal at current prices. Perhaps the jury is still out on that one.

As to Dave Murhpy's analysis, I enjoyed reading it and I think he is right that high oil prices will induce recession. However, whether that level is $80 per barrel or higher (others I have read seem to feel the number is more like $120 per barrel) is subject to debate. Even if oil does induce recession, though, that will not necessarily prevent the price from going higher. It will certainly reduce the number of people who have access to it, but ultimately it will be bought by those who have the means (which, granted, would be a smaller slice of the total population).

When it comes to future oil prices, I tend to lean more towards the Matt Simmons camp.

If you read RED-blog (renewable energy development), they have some very good analysis that coal is on the downside, as the cost of construction and the cost of environmental compliance has gone up so much, even without a price on carbon. NG plants are far more efficient and have far lower capital environmental compliance costs, plus lower CO2 emissions. Also, with more wind coming online, wholesale electricity prices are going to be far more volatile on a daily basis, which puts capital intensive and slow response time coal plants at a distinct disadvantage.

This is panning out already, as there has been a massive buildout of NG plants over the past decade or so (partially due to economics, partly due to regulatory changes), while very few coal plants have been built. Just yesterday a North Carolina utility said they were going to shut down 11 plants (30% of their coal capacity) and build NG plants instead, rather than spend billions on new emissions controls for the old plants.

Plus, with shale gas, while the industry hasn't yet shown that it's economical at these low prices in the long run, it is clear that there is a vast amount of resource that can quickly be brought online at the right price, which apparently is significantly lower than the price when it spiked last summer. That should at least be able to put an upward bound on NG prices.

Natural gas prices have recently been pretty low, and are competitive with coal some places. The cost of shipping coal can be well over half of the cost (for Western coal, long distances). So the price of oil may be more important than the price of coal in the calculation.

One, home heating has consistently seen a high elasticity of demand unlike oil use. Carter's sweater indoors, etc.

Two, there are 30% tax credits available to make $9 mcf gas seem like $7 or even $4 mcf gas.

I have seen enough to believe that the average US home can double it's energy efficiency. Money spent of "above recommendations" insulation, better windows and doors, etc. is not consumption but long lived investments.

Three, how does an economic recession make it impossible ? You wrote "oil above $80 a barrel sends the US into a recession. It is hard to see why the same wouldn't be true for natural gas". Recessions are likely to be the new normal, with recoveries short & anemic and occasional depressions.

If my gas bill tripled, I'd rapidly invest in more insulation, windows, and thermal PV, but I'd still make the payment without problem regardless (all things else being equal, which they wouldn't be of course). I wouldn't even downsize my house based on that.

Gasoline at $8 per gallon would be the same thing -- I'd trade my 35mpg car for a 60mpg plug-in Prius, drive a little less, and be OK. As long as I stay employed at half my current salary, life goes on quite similarly. Lower than that, it changes a lot quickly.

I guess my take is that a recession would happen at any prices higher than $100, and probably a series of feedback-driven cycles downward (like the one we just went through), but that a nominal cost of $100 per barrel oil and $10 ng is perfectly sustainable for a slightly less consumptive economy. It's not the cost but the EROEI that really matters, and shale gas seems to deliver from that perspective. It'll get used...but the later, the better.

Let's qualify that a bit. I own and 2nd gen. Prius, and the best tank average I've been able to manage is 52mpg. Throw in winter formulated gas, cold weather, and (usually) E10 gas, mileage drops off to ~40mpg. I could do some serious hypermiling, but invoking that wrath of fellow motorists isn't on my list.
There is no factory plug in Prius yet. There are companies that convert them, but it's a $10K+ add on. Even at $8/gal, $10K still buys you a bunch of gasoline. Getting 60+ mpg in a Prius takes some work.
My Prius lease is up in March, and I don't think I'll be getting another hybrid. It's not that I don't like the car, it's that the numbers don't add up. (yet) I'm looking at a 4cyl Ford Fusion. Given the price difference, my numbers say that gas would have to hit $6.50/gal for me to justify another Prius, and $8.00/gal for me to justify the Fusion Hybrid. Even if it did go that high, I'd cut back on my driving, consolidate trips even more, ride my bicycle, and share trips with my neighbors.
Unless the Dinner Jacket blocks the Strait of Hormuz, I don't see gasoline getting that high very soon. Demand destruction/recession will bring it back down.

Kingfish -- I'm not too optimistic about NG prices increasing very much in the next couple of years...at least. NG has always been a sub possibility for some industries but I suspect our weak economy would stifle such change overs until those industries see a rebound.

The US has a lot of NG to be developed besides the "legendary" shale gas potential. I can't really quantify that potential though. Maybe in a few years we'll have a "PNG" web site to chat about such matters. But what potential we do have isn't being developed to any great extent. And that's do to more than just low prices. We're buying into NG drilling projects just as fast as we can. And we have very little competition due to the lack of capital in the market. Needless to say we're not in the game to lose money. Nor do we run our economics on expectations of Ng prices rising anytime soon. We just drilled a successful NG last weekend that cost about $3 million and we'll recover the entire investment in less than 12 months and produce around $15 million net over the next 5 or 6 years. Nothing to not like about those economics. And we'll probably run a 60% or better success rate drilling the type projects we're buying into. We'll spend around $300 million over the next few years. But we don't generate the prospects. We're buying deals from prospect generators who have many years and much money invested in the effort. But, for the most part, they have neither the capital nor the investors to drill their deals. If I had to put a generating staff together it would take the better part of 10 years and many tens of millions of $'s to develop the number of projects we have before us today. Obviously very few companies are generating the drilling deals today that we'll need 5+ years from now. In fact, a great many of those operations won't even exist at that time.

The US gov't threw a lot of money at the auto industry and the banking system to keep them viable. Can you imagine if they did the same with the domestic energy industry. Those politicians wouldn't have to wait for their re-election loses...they be taken out and hung immediately. And as sure as the sun rising tomorrow whenever oil/NG spike again there will be standard charges that the oil companies stopped drilling just so they could make prices go back up. It isn't the Exxon et al that make the US the third largest oil producer in the world. It's the thousands of small independent companies. And those are the ones currently being driven to extinction. Our business plan is based upon this situation: we'll keep developing reserves in the ground as the rest of the industry flounders. And when prices spike we'll sell the company and go to the house (oil patch slang for retire). For the sake of the country I wish matters weren't so. But they are and we're in a position to take advantage of the lack of a realistic national energy policy. The US oil patch can't change PO. But it does add a great deal to the economy. Every $ we pay to a mom & pop oil company is one less $ we send overseas. Add that to the hundreds of thousands employed and the many billions paid in salaries and taxes. Lots of folks would rejoice if the US oil industry disappeared for the most part. Wait a few more years...you might get your wish.

ROCK any political movement that makes Sarah Palin seem rational is not long for the world, emotive bleatings such as the ones by wbs that followed yours won't heat granny's house, won't propel some new immigrant's F-150 or fuel Tiger Wood's private jet much less Limbaugh's when he seeks to fly off to the latest NFL clown show for the weekend. Reality is bearing down on us like it bore down on the USSR, the assumptions and fantasies of the blank slaters, American Dreamers and empire builders won't last long. Your boss seen the light, and one day it will be conventional wisdom and our current mommy prof PC will be as forgotten as any other theological bunkum. With that aside is your boss thinking of putting that production into oil and gas royalty trusts? To me that seems like a cannot lose proposition. My PBT amongst others seem to be a cash cow for the operators, because their expenses never seem to go down even though I read that drilling and services prices are down.

NO exi...no trusts. There's a time honored tradition in the oil patch. Everytime there's a price spike fools come out of the woodwork and pay too much for production. Technically we call this "stupid money". Really. So we'll wait for the spike and catch the first stupid money to come along and sell out. My owner doesn't need a trust. He's done very well and probably most of his net from out plan will go to some of the many charities he supports. He passed the point of needing to earn a living many years ago. Now he's in for the fun and to generate monies for his charities.

I just thought trusts would be a good business model for a field on the decline, and a way for an operator to realize some more gains after their big payday. My PBT is my producer, its been very good to me but when you mention "stoopid money" my HGT (natgas) and PGH (canadian) have put truth to that statement. Still they produce income even if it barely beats the opportunity of FED 10yrs, but hope springs eternal and the Natgas market will be more inline with my expectations.

again there will be standard charges that the oil companies stopped drilling just so they could make prices go back up

There is a bit of truth in that, although it is just the working of the market, rather than some sort of conspiracy. Why drill if you are going to lose money -or the bank won't give you any loans.

Of course the propaganda mills are laying the framework for "they didn't drill because the envoronmentalists wouldn't let them", which is always accompanied by "we got enough to statisfy BAU without imports if only...".

The fact that you can recoup your costs in less than 12 months tells me that the market price for NG, as much as it has fallen already, still exceeds production cost. I find that utterly fascinating. Consider this. Prices are a third of what they were a little over a year ago when we were being told about the impending crisis in natural gas supply. A year later, and not only are we awash in NG, but the cost of production is still less than the deeply depressed market price. What does this say about anyone's ability to predict NG supply? From this article Lower Natural-Gas Price Leaves Coal Out in Cold

"New natural-gas discoveries, however, in Texas, Louisiana, Pennsylvania and elsewhere, have created a gas glut that analysts expect to linger. Energy consulting firm Wood Mackenzie predicts gas prices won't recover until 2015." I wonder what these guys were predicting a little over a year ago?

The article also indicates how NG is now a threat to the coal industry for electrical generation.

I'm no expert at all, but my gut expectation is that NG will remain cheap for quite awhile as it becomes even more firmly entrenched as a source for electrical generation and heating, but that a day will come when within five years when the combination of increased NG use and decreased oil production will bring the previous predictions back again.

You're welcome Kingfish. I'll repeat what I've said before that some have misunderstood: oil and NG (especially NG) has never been as easy to find as it is today. That doesn't mean there's huge amount left out there but it's so much easier to find (much higher success rate = fewer dry holes). The key, especially for NG exploration, has been the improvement in seismic data. The geologic plays we're focused on now depend on this data. About 30 years ago when I started you would be lucky to have a 10 to 20% success rate in these trends (and that would be if you talked anyone into drilling in the first place). Now we're looking for a 60-80% success rate. Way back then you might drill a prospect that had a potential producing area of 2000+ acres. Those prospects are gone for the most part now. Today a 100 acre deep NG reservoir can net you $30 million. The key is that in some trends you can actually see a direct indication of the NG on the seismic. This 3d seismic is very expensive. That's why so many independents are floundering today: they've collectively spent billions shooting this data over the last 5 years or so and now, when it's time to cash in by drilling the prospects, they have no money. I'm looking at 30+ such prospects right now. A year ago last spring I wouldn't have 90% of them available to me: someone else would have already bought them. Our biggest problem is that there are only 4 of us and it takes time to qualify and close on these deals (actually similar to closing on a house purchase).

But that's why I'm very pessimistic that there won't be much domestic drilling in another 5 years or so. If the vast majority of operators don't have the money to drill today they certainly don't have the funds to shoot more data. Little by little we'll use up the current inventory. A lot of the prospect generators will be heading to the house in the next 10 years. We are a very gray haired lot with very few behind us. The oil slump of the 80's caused a big manpower hole in the industry. It take 4 to 6 years of college and another good 5+ years of on the job training before most hands can begin to be productive. As I said earlier: good for us but not so much for the country. Folks don't view us as such but the US oil industry is one the last major domestic "manufacturing" business. Can't outsource what we do to India. The salaries and taxes all stay within our borders. And most folks don't realize that our current domestic production pays out about $30 billion/yr in royalties to the Federal gov't and private land owners. We all understand we can't drill our way out of PO. Energy independence, at least in the next few decades, is a farce at best. But the domestic oil/NG industry is a vital component of our economy. And it does appear to be slipping away. We've had our slumps in the past and eventually recovered. That may not be the case this time around.

p.s. Don't focus on production cost so much for NG. Generally production costs (the actual overhead you incur while producing a well) for NG is rather small especially when compared to oil. It's the exploration costs and success rate that determines how many NG wells are drilled. Assuming there is capital available to do so of course.

Rockman, I can't thank you enough for that enlightening post, worth more than many times more words I have read elsewhere. Your p.s. is something that has intrigued me for a long time -- the roles of initial sunk costs vs. ongoing production costs. With perfect foresight, a business planner can properly allocate startup sunk costs over the life of a project. But perfect foresight is in short supply. So what I have observed over the years is that companies sink tons of money into startup costs when everything looks good. Then, when things turn sour, they eat the startup costs and continue to operate because they still make an operating profit. BUT, they don't continue to invest for the future and eventually the operating profit dries up and things grind to a halt prompting a price spike and a new round of over-investment. That sounds to me like what you are describing.

So, here's the paradox as far as I can read it. It's easier to find the NG with new technology, but the new technology is so expensive that it largely offsets the benefit it provides. And the reservoirs are smaller to boot. So, the NG easier to find if you're willing to spend enough money to make it not worthwhile to find. Is that right?

You've got it right Kingfish as far as how we react when time get bad. In Texas we call it "hunkering down". Especially true of small operators that essentially pay their own salaries. They can still pay the mortgage with a few stripper NG wells even when prices drop below $2. No new truck that year but they don't go hungry either.

The 3d seismic is expensive but an absolute necessity for many. Many companies/investors (including my owner) won't even review a prospect if there's no 3d supporting it. As usual it's the timing that tricky. Had not the biz collapsed at the end of last year these prospectors would be in high cotton right now. Last summer we had a prospect expo in Houston: all the prospectors set up booths (over 300) at the convention center to pitch their deals. We were only one of a handful that were buying. We bought one deal right on the floor that's the best prospect I've seen in my 34 years. A legitimit 20 million and 100 bcf target. And it will cost only $3 million to see if it's there. Another buyer wanted it but went to lunch to chat about it with his cohorts. I didn't eat lunch that day...lucky us. We spud it over the Christmas holiday. Under normal times this deal wouldn't have even been offered for sale. Someone would have called someone and they would have bought it over the phone.

That emphasizes the main point I've been getting at: from a price of oil/NG standpoint these are not especially bad times for the oil patch. It's the lack of capital that's holding things up. This might strike you as odd but the price of oil/NG doesn't generally determine your success. Drill a dry hole and it doesn't matter what the prices are...you lose. Drill a well that makes you 5 times your money back even at $2 per mcf and you're a success. Again, it will sound odd, but historically the oil biz ends up being the least profitable during high price periods. It's that time lag again. The high oil price in the late 70's led to 4600 drilling rigs running in the US. At least half those rigs drilled dry holes ALL THE TIME. That boom in energy prices led to hundreds of oil companies breaking their backs. Mobil Oil was one of the bigger. That's how they were eventually bought by Exxon. The best profits are made by drilling good wells during low price periods when there is less competition and the seismic/drilling costs are low. Then you hold your breath waiting for prices to spike. Then you wait for some idiot (usually from NYC and the such) who thinks such good days will last forever and he offers you too much for your production. Just like tossing hand grenades: timing is everything.

I stirred up a bit of controversy a few weeks back complaining about the frequent reliance on Denninger by this site for financial commentary. My main complaint at the time was that Denninger is a leading figure in a nascent political movement that displays a lot of ugly undertones. But today seems like a good time to point out another thing that has been bothering me: the continued over-reliance on the "teabagger" or "libertarian" views, predictions, and prognostications by Denninger, Mish, etc, have in my opinion left this community with a confused understanding of what's going on. We're drifting away from the future that seemed so clear to these guys (and some on this site) just 6 or 12 months ago, and the posts by some of the folks myopically hanging onto that "thesis" are starting to sound pretty disjointed to me. In my opinion we would do better here to throw the net a little wider when trying to understand the economic and political fallout and future trends cause by peaking (or peaked) oil production.

They made good calls about what was coming several years ago. But after the first step down on the peak oil ladder of decline, their thesis isn't working for me.

In my opinion we would do better here to throw the net a little wider when trying to understand the economic and political fallout and future trends cause by peaking (or peaked) oil production.

I think we do. In fact, I get far more complaints about how liberal/lefty this site is than I do about it being too conservative or libertarian. In any case, if you don't like it, feel free to post your own links. Or, heck, start your own site.

Personally, I don't buy the politics of any of the writers I link to. Greer perhaps comes closest to my view, but I don't agree 100% with him, either.

I'm not an economist but I do know that it's X-mas and temporary hires were done in Oct/Nov and they will be shed next month. Since we only lost 11,000 jobs how did the unemployment rate go down? I don't get it.

Of course seasonal adjustment, using historical data (i.e. from different economic times), isn't without controversy. But it does look like the downward phase is ending -at least for now. I have serious trepidation about the future however. The current numbers include roughly a million stimuls jobs (CBO had wide error bars .6 to 1.6), and this has peaked. Even worse I think we have an overhang wrt state spending, i.e. most states fudged to get through 2009 -pushing bill payments into 2010 and other such accounting tricks, so I think many state will find in 2010 that defered painful cuts can't be avoided any longer.

And do note hiting the floor (ouch) is different from climbing back up. We may hopefully have stopped falling, but those who were put into dire straights still don't have very good nearterm prospects.

It's only a floor while the Fed is buying every mortgage sold and the federal government is spending almost 100% more than it takes in. Sooner or later the printing and the borrowing will have to stop. The banks are still bankrupt, and the market "recovery" is based on, well, nothing. Climbing back up ... you have to get to the bottom first.

I wish you luck with your book.
Maybe, New Society Publishers (www.newsociety.com) could be a good option to publish your book.
The books: Plan C [Pat Murphy]
POWER DOWN [Richard Heinberg]
REINVENTING COLLAPSE [Dmitry Orlov]
were all publised by New Society Publishers.

Yes, great news to hear you are considering such a project. I was just thinking how nice it would be for some of the more articulate posters here to publish something substantial for the masses. You, Magyar, and a few others (can't include memmel since every one of his posts is a book already ;-} Where is he these days, by the way. Has he been scared off?).

Anyway, best luck. If you want a reader for any part of it, I would be happy to proof it.

I've been urged to have a blog because it may amount to a book someday, and after a DECADE of trying to get a blog or page set up, I have one, but I fear the only publishing we'll see in the not-too-far future will be broadsides done by etching copper or even woodblocks.

I'm a hard one to convince there's ANY money in writing. I write daily in my blog but hardly anyone reads the thing and as I'll keep saying until it sinks in: The Internet is in its last decade.

The things I say make people very angry, because I describe the things that happen to me, and it scares the Bejeesus out of them because it could happen to THEM. I describe my actions in response to the changes in economics, environment, and "degrees of freedom" and THAT scares 'em too because they see that in the same situation with the same factors they'd have to do the same.

The things I _used_ to say made people very angry indeed. I basically gave up. I realized that we were not debating facts and having a reasoned debate about the implications of those facts. No, it's a simple clash of world views, and no amount of facts, references, logic, etc. has any effect whatsoever. Other than maybe to drive them further into their position.

However, I had a lapse this Thanksgiving, with the predictable results. Back to just smiling and saying "I hope you're right". Though I don't, usually.

Writing is like playing music.Most of us who indulge will never get paid.

A few who are willing to play the game the way the entertainmentbuying public wants it played can earn a very modest living playing local clubs and parties.

A very few indeed hit the big time and make some money.

I have averaged about a dollar an hour when I tried to sell small pieces to various trade publications and nothing whatsoever as a writer of stories or novels.But I have been offered an an inhouse job making a very modest salary working very long hours as a staff writer in industry.But the same industry pays more for skilled labor, and skilled labor gets ot past forty.

As WNC remarks below I wouldn't be able to sell a serious book because I would tick off EVERYBODY.

But I might be able to give it away over the net. That would satisfy my urge to quote "do something".

If this community's understanding has become confused, perhaps you could share a little on what's 'really going on'. I mean that sincerely. Denninger is a blowhard who has cried wolf so many times I can't read him any more. I love Stoneleigh and Ilargi at The Automatic Earth (check it out!).

My personal take is that this site is non-political, possibly anti-political. People here are usually very critical (like yourself :-) ), and are perfectly capable of thinking for themselves. That is rare in and of itself. Most people, I suppose, just come here for information, dot-connecting, preparattion, you name it. But not to promote a political agenda.

I don't think people are non-politicial, nor do I mind espousal of political (in the widest possible sense, eg, capitalism, socialism, techno-saviourism, techno-nemesis,etc) values. The irritation/problem comes when people attempt to make bold statements about how (general) political programmes "will obviously lead to result X" (or "would, if implemented,...") far in advance of any empirical and observational support. (This seems to me very common and annoying on economics/financial sites.) The extreme is when they've decided the conclusion they want to acheive and will do various annoying things to "prove" their point. I don't think "reality is apolitical" is quite the point: rather "appreciation that reality forces you to consider political programmes based on how they will work, not how you think they ought to work, is appreciated by oildrum posters".

I see quite a lot of political values on the oildrum, but there's a relatively low level of people trying to justify their political programmes; when posters have an alternate view presented to them, they genuinely try and see if they should change their views.

We're drifting away from the future that seemed so clear to these guys (and some on this site) just 6 or 12 months ago, and the posts by some of the folks myopically hanging onto that "thesis" are starting to sound pretty disjointed to me.

I haven't a clue as to what you are talking about Black Sky. What was the future that seemed so clear to these guys and some on this site? What "thesis" are we hanging onto? Anyway, I haven't detected any change in the average post on this site in the last year or so. We were all over the map then and still are today.

But as far as trying to "understand the economic and political fallout and future trends cause by peaking (or peaked) oil production", hell, that is exactly what we are all trying to do. That is what TOD is all about! Of course we all have different opinions as to what the effect the peaking of oil production will have on the world. And again here, opinions are all over the map and that is to be expected.

The opinions range from those of Roger Conner who believes that the decline of oil will lead to a much better and happier place once we are "freed" from the grips of oil dependence to doomers like me who believe that it will lead to total collapse of the economy and a dramatic die-off of the population. But all those different opinions are really what make this site so interesting. If we all agreed this would be a very boring list and posts and readership would soon drop to almost nil.

I'm just happy to have discussion out in the open as opposed to the dutiful daily linking of Denninger followed by the chorus of doomsayers.

Right now I don't trust my own perceptions of what's happening enough to even predict anything. Part of that is because I got sucked into the whole imminent financial doom and societal collapse thing pretty hard over the last couple years, and I don't sense it's actually playing out like that, at all. That's why I'm hoping this particular community, which is self-selected for a pretty damn high level of intelligence and skepticism, can expand the thinking a little beyond what it has seemed to be lately to me, which is a combination of whoever is being more doomerish that day- Kuntsler or Denninger.

I don't assume you all think that way, because really it's a pretty small portion of the members who post the majority of the time here. I'm just going on my overall impression, which is susceptible to the same foibles as every other subjective generalization. Prove me wrong, please.

I'm just happy to have discussion out in the open as opposed to the dutiful daily linking of Denninger followed by the chorus of doomsayers.

If you have opinions that are opposed to those of Denninger or opposed to opinions posted by us doomsayers then for God's sake post them instead of bitching about what we post and what bloggers we link to.

That's why I'm hoping this particular community, which is self-selected for a pretty damn high level of intelligence and skepticism, can expand the thinking a little beyond what it has seemed to be lately to me, which is a combination of whoever is being more doomerish that day- Kuntsler or Denninger.

First Kuntsler only posts once a week so it is hard to get his opinions on "that day" as you put it. And second Denninger never mentions peak oil and refuses to post any replies on his site that even mentions peak oil. And third, only a very few of us ever read Denninger and this site is certainly not a place where his opinions are widely discussed. I think you just got your button pushed because his name is occasionally mentioned. Dozens of other bloggers are often mentioned here as well and carry just as much weight as Denninger.

But I make no bones about it, I am a doomer and have been one since the mid 60s. I have seen, in my lifetime, the population of the world triple. We are deep into overshoot and have been for over 40 years. The long term carrying capacity of the earth, if fossil fuel never ran out, is about three billion or so. Without fossil fuel and fertilizer derived from fossil fuel, well under one billion. That is why I am a doomer, not because of anything Denninger or Kuntsler says.

But as I said if you have different opinions please post them along with your rational for holding such different opinions.

I don't agree that "this site is certainly not a place where his opinions are widely discussed," at least in relation to other views on the economy. My only opinion that I am expressing is that the economic present is not developing in a way that merits the continued over-reliance on that certain school of prognosticators, and isn't there anyone out there making more sense these days?

What about the moral implications of what we should do compared to what we are doing? For example, you can find a multi-page thread on Denninger's forums where people try to outdo each other in their criticism of Pelosi's proposal to direct unspent stimulus funds towards saving the jobs of teachers, emergency responders, and healthcare providers. Mish frequently calls for cutting spending on the same groups. Are we all in blanket agreement here that libertarian economic policy makes sense in a receding economic climate? (edit: of course not. But lets hear from more than one opinion.) What are the alternatives? Is it valid to have some kind of government-led economic triage in a decaying society or should we let the market make all these decisions for us? In my opinion the powers that libertarians prescribe to "the market" border on magical thinking. If we really are post peak, shouldn't we be in a crisis mindset and not a "let the pieces fall where they may" mindset?

When the discussion of economics never progresses past the dutiful links to Denninger, I as a reader am left with little to go on for those questions.

This is not a cohesive argument, I know. It's too big of an issue for me to tackle in a cohesive way. But it's not being discussed in a cohesive way by anyone here right now, which is what is bugging me.

There are posts to Krugman, Calculated Risk, Barry Ritholtz, et al, quite often. Sometimes there are posts to some economist or researcher that mentions peak oil for the first time.

Further, I think most here ignore economics in favor of analyzing the impacts on society in different ways. I cannot recall how many times the notion of "infinite supply in a finite world" has been discussed here. Since many economists base their analysis on this flawed assumption, I just don't think that many take them too seriously.

However, I certainly don't want to speak for the entire group here on TOD. These are just my impressions of the group here on TOD (which could be my own flawed assumptions).

One woman was expecting a $75,000 payout after contributing a rocket propelled grenade launcher to an attack.

It is a lucrative business that has drawn financiers from the Somali diaspora and other nations -- and now the gangs in Haradheere have set up an exchange to manage their investments.

One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved.

"Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 'maritime companies' and now we are hosting 72. Ten of them have so far been successful at hijacking," Mohammed said.

"The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials ... we've made piracy a community activity."

Are we all in blanket agreement here that libertarian economic policy makes sense in a receding economic climate?

No. But the numbers are non-partisan, and they are ugly. There's going to be less money available to support government services. And being aware of resource constraints, I don't buy the Keynesian claims that more spending will fix everything.

Call me a "povertarian." We'll have less government because we can afford less, not necessarily because we want less.

And honestly, I don't see how you see can this site as a bastion of support for the free market. We routinely post articles about the end of capitalism, how capitalism failed, etc.

I had an e-mail inquiry about ordering copies of "We had everything but money," which I consider to be a pretty good guidebook for the Greater Depression, based on the Great Depression. Here is the direct link:

Thanks for reminding me of that book, I can't forsee when I"ll be able to afford it, but it's in my "dream library".

Geez .... I used to eat sushi, beer'n'fish'n'chips etc., now well, I'd say my diet is better and alcohol far out of my financial range and more greens and gathered stuff so my diet's better but I can sure relate. "Sow boson" sounds cozy, if it's as delicious as $2/lb* bacon and cabbage, it's delicious indeed.

*"Big Buy" brand from Grocery Outlet, better than Safeway brand and cheaper, cut in 1/4's and it's 4 meals with cabbage or collards etc, fit for a king!

I bought several books and have been handing them out. I sent books to Bart, from the EB, and to JHK, who both thought it was optimistic. I've got two copies left. I just donated one to a teacher doing a Great Depression study program in Fort Worth. If you wish, you can have the last copy. Shoot me a mailing address if you want it.

The Urban Survival guy used to have a little booklet you can buy on how to survive on $10,000 per year. I assume that it is still available. Or as I put it, "Cheap is the new chic."

People have the option of posting their e-mail addresses in their profiles. (They will be spam-protected.) Westexas does have his e-mail addy in his profile. He was asking you to contact him that way. Click on his name, and you'll see his e-mail address.

But it shouldn't be too big a problem with respect to spam. All links posted in the comments here, including e-mail, have "no follow" tags attached, meaning search engines won't pick them up. Studies show that posting your e-mail address on a web page doesn't put you at too much risk for spam. And Gmail is pretty good at weeding out spam.

That book isn't in it, but yes the good old library is a good way to read books I'd not have access to otherwise.

Libraries have to be treated with caution these days, fees can easily end up costing you more than the same book would at a garage sale or Goodwill, some are OK for 2 weeks, some for 3, and some are returned on time (and you check and KNOW you're on time) but somehow didn't get checked in, sat in the bin for a few days etc. or something and you end up paying $2 in fines, I NEVER got stung like this 20 years ago, after a while you give up on the bastards except for their honor books and book sale area.)

Hehe I got a factory repair manual for 1979-80 Harley FLH models given to me today, that goes into the Doom Library plus I'll read through it just for enjoyment.

The long term carrying capacity of the earth, if fossil fuel never ran out, is about three billion or so. Without fossil fuel and fertilizer derived from fossil fuel, well under one billion. That is why I am a doomer, not because of anything Denninger or Kuntsler says.

Ron, from what I read from other posts, you are a doomer in the first place because you predict an economic collapse in the next (two) decade(s) with a shortage of money to buy food for a lot of people. What you write here seems to be a doomer scenario in the first place because of shortage of food for billions.

Huh? No, neither is correct. I cannot predict exactly what or how it will happen. Of course there will be a shortage of food around the world. But the shortage takes full effect there will be, as is right now, millions of starving people simply because they have no income to buy food, shelter or anything else. Their numbers will jump from millions to billions however.

The very obvious thing is that we are now deep into overshoot. Fossil fuel has enabled us to produce massive amounts of food and this has allowed our population to explode. Fossil fuel has allowed us to produce fertilizer that allows us to produce massive amounts of food from marginal land. And only fossil fuel allows this to continue.

China, for instance, uses over twice as much fertilizer as the US per hectare. They must because feed so many millions for so many years has almost destroyed their topsoil. Their land is literally blowing away. The frequency and severity of dust storms there have dramatically increased in recent years. The story is similar for many other places in Asia.

Peak oil is only one aspect of the impending collapse, but perhaps the most important one. When oil production starts to drop panic may set in many oil exporting nations. They may start to hoard their oil. This will cause things to get very bad very fast.

What will happen then? Hell, I haven't a clue but I don't think it will be pretty. Things will get very bad very fast. I will make no predictions beyond that point.

Ron, then predict is the wrong word. You wrote in one of the Drumbeats that you think that for a lot more people shortage of money to buy food will be the biggest problem in the coming collapse. No one can predict exactly what will happen, but you seem convinced that an economic collapse will happen because you write it many times. In fact, I expect the same thing: that 'end of economic growth' means 'end of story'. There are some people who write that for growth you don't need increasing amounts of (cheap) energy, but I doubt it. However, what happens when a lot more people are going to use more fuel efficient cars, bikes and/or go by train/bus ? In that case a lot of fossil fuels will be saved and there is still a possibility of economic growth, unless the oil-exports are dropping too fast.

Fossil fuel has enabled us to produce massive amounts of food and this has allowed our population to explode. Fossil fuel has allowed us to produce fertilizer that allows us to produce massive amounts of food from marginal land. And only fossil fuel allows this to continue.

Yes, but that don't have to be a problem in the near future. Another problem is if rising diesel prices will bankrupt many farmers.
Obviously you don't believe that there ever will be produced enough third generation biofuels for massive foodproduction to continue.

When oil production starts to drop panic may set in many oil exporting nations. They may start to hoard their oil. This will cause things to get very bad very fast.

Apart from the possibility of an economic collapse, I also think panic is a big risk.

You wrote in one of the Drumbeats that you think that for a lot more people shortage of money to buy food will be the biggest problem in the coming collapse.

I don't remember putting it in that context but that will be one of the first problems. I hear so many people talk about all the food we produce and waste. They say, simplistically, that we do not have a food production problem but we have a food distribution problem. As if we could just figure out a better way to distribute all that food then all hunger would end.

The real problem, as I have stated many times, is that those hungry people have no money to buy food and no farms to produce food on. Farmers don't give away food no matter how good a distribution system they have.

Yes, but that (fertilizer) don't have to be a problem in the near future.

That all depends on your definition of the near future. It was a problem when natural gas prices were extremely high in 2007 and 2008. Not a problem now but it sure as hell will be one in the not too distant future.

Apart from the possibility of an economic collapse, I also think panic is a big risk.

Panic caused the stock market to collapse in 29. Panic caused many a bank to go bust during the Great Depression. Panic always makes things much worse than they actually are. Shouting fire in a crowded theater creates panic and people get trampled. Panic, in the future, will be a far greater problem than most can imagine because people do not think rationally when they are in a panic.

That all depends on your definition of the near future. It was a problem when natural gas prices were extremely high in 2007 and 2008. Not a problem now but it sure as hell will be one in the not too distant future.

For that problem to get worse the gas prices will have to stay high for a longer period. Very high prices even if demand crashes.
You didn't comment on the (im)possibility of third generation biofuels to replace fossil fuels, at least for the food production chain.

You didn't comment on the (im)possibility of third generation biofuels to replace fossil fuels, at least for the food production chain.

Are you joking? Do you think you could replace fossil fuels for just one thing and not anything else. Like just tractor fuel and not truck fuel or automobile fuel? Anyway you produce biofuels instead of food!

Everything is interconnected. You cannot produce only food and nothing else because it takes everything else just to produce, store, refrigerate and deliver the food. And then there is the problem of employment. If no one has jobs how can they buy food that is produced instead of all other fossil fuel products?

Hey, when oil production goes everything collapses. You cannot just throw people food produced with biofels and keep the world's population going right on as before. That whole idea is truly absurd.

Not necessarily. Check out the Drumbeat link above titled "Big Plans for Ethanol from Algae". There is no food growing now in the Sonoran desert, and I doubt if anyone would ever want to try and grow food there. Also, there are some big names getting involved with algae biofuel. Algenol has hooked up with Dow Chemical, and Exxon is also investing in algae research. They obviously see some great potential for biofuel.

There are actually three main camps here on TOD. The doomers need no introduction and are perhaps the most vocal of the three. We used to have quite a few technocopians, but their number has dwindled quite a bit; I don't know if reality or the constant arguments with the doomers got the better of them. Sandwiched in between those two extremes is the middle-ground camp of declinists, among which I include myself. To the technocopians, declinists tend to get lumped in with the doomers, and to the doomers declinists tend to get lumped in with the technocopians; both judgments are inaccurate and unfair.

Actually, while I think that the Great Recession has done a lot to shake the confidence and world view of the technocopians, I've been waiting for some to suddenly come to the realization that civilization has not yet actually collapsed after all, so maybe the doomer scenario is going to unfold quite a bit more slowly than initially believed - or maybe even that the declinists might not be quite so nuts after all. Your's appears to be among the first of the reappraisals.

A Geologist and an Engineer......
A Geologist and an engineer are sitting next to each other on a long flight from LA to NY. The Geologist leans over to the Engineer and asks if he would like to play a fun game. The Engineer just wants to take a nap, so he politely declines and rolls over to the window to catch a few winks.

The Geologist persists and explains that the game is real easy and a lotta fun. He explains, "I ask you a question, and if you don't know the answer, you pay me $5. Then you ask me a question, and if I don't know the answer, I'll pay you $5." Again, the Engineer politely declines and tries to get to sleep. The Geologist now somewhat agitated, says, "OK, if you don't know the answer you pay me $5, and if I don't know the answer, I'll pay you $50!"

This catches the Engineer's attention, and he sees no end to this torment unless he plays, so he agrees to the game. The Geologist asks the first question. "What's the distance from the Earth to the moon?"

The Engineer doesn't say a word, but reaches into his wallet, pulls out a five dollar bill and hands it to the Geologist.

Now, it's the Engineer's turn. He asks the Geologist, "What goes up a hill with three legs, and comes down on four?" The Geologist looks up at him with a puzzled look. He takes out his laptop computer and searches all of his references. He taps into the Airphone with his modem and searches the net and the Library of Congress. Frustrated, he sends e-mail to his co-workers -- all to no avail.

After about an hour, he wakes the Engineer and hands him $50. The Engineer politely takes the $50 and turns away to try to get back to sleep.

The Geologist is more than a little miffed, shakes the Engineer and asks, "Well, so what's the answer?"

Without a word, the Engineer reaches into his wallet, hands the Geologist $5, and turns away to get back to sleep.

I understand you to say that civilization hasn't collapsed because it hasn't collapsed for you. Your opinion might be different if you hailed from Harare or Port au Prince or Pyongyang. (More cities to be added to this list soon.)

How much decline constitutes collapse? How many starving souls bereft of hope do you need to call collapse? Perhaps so long as they remain comfortably distant, relegated to the developing world, or just the bad part of town outside your gated community, then we're still managing okay? In the limit, if there's still one functioning library, one seed bank, and one coal-fired power plant left on Earth, is that enough to maintain the claim that civilization is merely in decline? Provided that you're still warm and fed, of course.

What we are talking about here are a range of future scenarios which can be arrayed along a spectrum. I can imagine relatively optimistic scenarios that still have basket-case nations with suffering populations. In fact, that has been the case with the scenario that actually happened over the past half century or so. I can also imagine relatively pessimistic scenarios in which most of the world's nations are basket-case, and most of their populations are suffering, and yet there continue to exist some "lifeboats" where most of the essential trappings of civilization - including science and technology - manage to be maintained. I am inclined to very much doubt that any one imagined scenario has a probability of 100%, but I am also inclined to think that those in the midrange of the spectrum have higher probabilities than do those on either extreme; that's what makes me a declinist instead of a doomer. I also acknowledge that those more extreme scenarios - especially the most extreme doomer ones - don't have probabilities of 0%, either.

I think this is a good way to look at different perspectives. Almost everyone agrees that there is a high level of uncertainty, and hence multiple possible solutions that broadly range from less painful to frightful. The main difference is in people's expectations, or internalized probability distribution, applied to those scenarios. Using your three groups, doomers and technocopians respectively believe in a high probability for the low or high end of this spectrum. Declinists may believe in a wide range of possibilities due to higher perceived uncertainty (maximum uncertainty being all of equal chance) or they may believe in a more narrow band of intermediate scenarios (e.g catabolic collapse).

Phooey. A few quadrillionaires with the biggest fortresses and the most amazing techno-toys might represent the absolute pinnacle of complexity, far outweighing the loss of "complexity" that's inherent in the reduction of a billion people's means from $2 a day to $1 a day. Does that mean that civilization and society haven't collapsed, so long as a handful of people still care about 45 nm VLSIC's?
Maybe it's my assignment of complexity that differs from Tainter's, but more likely it's my definition of civilization.

A few quadrillionaires with the biggest fortresses and the most amazing techno-toys might represent the absolute pinnacle of complexity, far outweighing the loss of "complexity" that's inherent in the reduction of a billion people's means from $2 a day to $1 a day.

Actually, that's pretty much part and parcel of Tainter's definition of complexity. Societal complexity is societal inequality. It's only in foraging societies that everyone is equal. In such societies, everyone can do everything. There's no specialization. People hunt and gather their own food, make their own homes and clothing and tools, etc.

Technological complexity and social complexity go hand in hand, because technology requires specialization. Those quadrillionaires cannot build their own fortresses and their own amazing techno-toys. They need professionals like architects and engineers and scientists. And the professionals needs farmers, laborers, etc., so they can spend their time designing amazing techno-toys rather than growing their own food, sewing their own clothes, etc.

Tainter avoids using the world civilization because there's an implicit value judgment there. He prefers "complex society" to "civilization." And he notes that simplifying - becoming less civilized, if you will - is often beneficial, at least for the people as a whole (though probably not for the quadrillionaires at the top).

I repudiate the identification of social complexity with inequality, or specialization with stratification. For ten thousand years the governing myth was matriarchal and Earth-based, and it wasn't until widespread smelting of bronze took hold that conquest and a patriarchal God would become the norm. Hierarchy and class surely prevailed long before then, but it was only by the sword that the ruling class could enforce an unpopular hegemony.
Too bad that so little history is preserved from the Minoan civilization, or we might have a viable model for a society that is at once complex and egalitarian.

For ten thousand years the governing myth was matriarchal and Earth-based, and it wasn't until widespread smelting of bronze took hold that conquest and a patriarchal God would become the norm.

There really isn't any proof of this. For ten thousand years there was a lot of variety in human societies - that I could get on board with. In any case, matriarchal and earth-based beliefs can lead to inequality, too.

And I don't think it was smelting of bronze that was the beginning of inequality. It was agriculture. Agriculture was what let people accumulate wealth, and that was the beginning of inequality.

Agreed: It was agriculture that permitted accumulation of excess wealth and made large inequalities possible. But it was the patriarchy that deified conquest, from Alexander to Lebensraum to Manifest Destiny to compulsive Democracy.

"Too bad that so little history is preserved from the Minoan civilization, or we might have a viable model for a society that is at once complex and egalitarian"

Much too good that you have to look back Thousands of years to find a viable model of a complex system that was a viable model of complexity and egalitarian. That in spite of likely hundreds of attempts in the meantime, from the Puritans (you should read about how their egalitatian experiment went as they starved for three years until they converted to an ownership society and starvation disapeared overnight)(even in not so complex a society), to communists that became dictatorships (give government that much power to create equalty and keep things fair and equal by law and that's what always seems to historically happen). Hundreds of examples in the meantime and you cite the Minoans...but of course as you admitted "so little history is preserved" so maybe that didn't work at all either (in which case I believe no society has ever achieved egalitarian success in the history of man...but we should ignore history and keep on trying even if it could lead to dictatorships).

Another point relating to what you said further above about collapse is that for many starving and poor people around the world we are effectively in the process of heading for relatively more success and equality. Not everyone on the planet is becoming poorer. The previously totally impoverished billions are getting more wealth (ie. 4 billion people of 6 1/2 billion now have cell phones...many more cars sold in China last 1/4 than U.S., less starvation by far in China and India on average) while we in the Western World will have relatively less wealth (smaller cars, smaller homes, closer vacations) but that doesn't neccessarily mean collapse either in the Western World...

except perhaps in the United States (thanks to 57 trillion in debt from politicians who refuse to tell the truth...that social security and medicare were designed when the average life expectancy was 68 and you cann't have our society with 1/3 living off government pensions and government medical care...or the new government healthcare proposals that will greatly damage the remainder of what is left functional in the U.S. (Government created the healthcare crisis and high premiums in myriad ways (under reimbursement from medicare and medicaid, illegal immigrants free care, malpractice and defensive medicine, state mandates on what needs to be covered, 6 states mandating no denials of coverage and driving up prices so those states have the least participation in health coverage (ie. NY fifth lowest participation in the country) and now Government is going to fix it... or increasing taxes on small business and driving unemployment up by creating an "equal" society that disincentivises work and success (as the Puritans did before they almost starved to death) or just printing too much money to meet too many promises.

"The previously totally impoverished billions are getting more wealth"

Hey, wallstreet, maybe if you read something besides the oped pages of your favorite journal you would have heard that, after years of gradual reduction in the numbers of severely undernourished, their numbers have been increasing over the last year and a half from well under one billion to well over:

'In 1985, the best data available suggested that 30 million people had diabetes worldwide. Fast-forward 15 years and the numbers were revised to just over 150 million. Today, less than 10 years on, the new figures -- launched at the 20th World Diabetes Congress in Montreal, Canada -- put the number closer to 300 million, with more than half aged between 20 and 60. IDF predicts that, if the current rate of growth continues unchecked, the total number will exceed 435 million in 2030 -- many more people than the current population of North America.'

I admit you might be right but you also might be totaly wrong. 1. The population of the planet increase from 2007 to 2009 so one of us would have to research whether this increased as a percentage of the world population. 2. The statistics are from 2004 which on this fast moving planet are truly ancient. 3. I am also totaly skeptical of any facts coming out of the World Bank as they could easily be self serving and selected to develop maximum organizational support. A lot of times an organization like this would change the definitions or present slanted statistics to meet the organizational goals (maximizing contributions)...and 4. they are "estimates" based on 2004 stats. What I do know and see Plenty of evidence of is that Billions of people around the world are getting access to more wealth than they ever had. The fact that 1 1/4 million car sales in China last 1/4 is amazing. The fact that 4 billion people have cell phones is indicative because years ago many of these people couldn't afford Anything at all. If you can afford a cell phone you probably can afford a hamburger (although I have no statistics on that) or at least are more likely to be able to afford one or at least could be on your way to affording one (since communication capacity would certainly be expected to enhance productivity).

China and India are almost half the worlds population by themselves. They along with many other highly populated countries like Brazil and other emerging countries are doing quite well. As they grow (except subject to the constraints of peak oil) poverty is likely to be reduced. It is the United States that we should be worrying about where inflation and peak oil and swollen government will be increasing relative poverty (but of course our poverty is another man's wealth...for instance the poor in the U.S. have more living space than the average European and the poor in this country eat better than much of the world).

The fact that 30 million people have diabetes has very little to do with proving an increase in worldwide poverty. If the world were much richer diabetes would likely be very much higher. I would have guessed even higher than 30 million already. Many of them are overweight and happy in the United States and the developed world. Also, many of those people eating sugar might have had nothing to eat before. What diabetes statistics could indicate is general worldwide ignorance of proper eating and exercise habits and especially in the U.S.

So...no one in Norway has a Ferrari or a Mercedes or a big home or castle or is it that everybody has one?

Also, I am curious, if the answer is that everybody gets a Ferrari or Mercedes then do the 8.7% of unemployed in Sweden get to have as much as everybody else? That doesn't seem very egalitarian because the rest have to work for their Ferrari..

I would also add that people in countries like Norway (and the US, for that matter) are supported by the labor of poor people in other countries. In the age of globalization, you can't just look at one country and declare the society egalitarian.

Yes, in Norway no one drives a Ferrari. It is very much against the egalitarian ideal and is considered to be very bad for the climate.

There is some old money in Sweden but they tend not to flash it.

The unemployed in Sweden (& Norway) are better off than the US workers working two jobs at minimum wage. Much less social distance as well between them and, say, the management class or MDs.

The small Mercedes are not considered a luxury car (Saab & Volvo are the domestic brands in Sweden) but just a good quality car. The V-8 Mercedes are a bit much though. Gauche.

I recently asked a Norwegian (I live two blocks from the Norwegian Seaman's Church, the center of all thinks Scandinavian in New Orleans) what he thought of New Orleans after having been transferred here 9 months ago. After the food, music, friendliness of the people, the summer weather !, he mentioned that it bothered him a great deal to see so many poor people, many with obvious physical problems due to lack of health care. It violated his basic sense of human decency and the way people should be treated.

He said that he would gladly pay much more taxes in Norway to prevent such a thing. After all, all people should be equal.

So there are different Mercedes (but some gauche) in Norway. Can every citizen afford a Mercedes, Saab or Volvo? Also you didn't address the size of peoples homes at all. Do some people live in large homes while others in apartments or more expensive homes or small homes or does everyone have equal wealth in terms of their property?

What about buying clothing, jewlery, restaurants, vacations..is everything about equal between everybody and does everyone have the same amount of money whether they save it or spend it?

Also, when your friend said all people should be equal, does he mean in terms of how much money they have or how much they can spend? Does he believe all jobs should be paid equally? What if someone doesn't want to work, should they have as much as someone who wants to work a lot of hours to earn more? Should all jobs be paid equally no matter what the required skills and education?

Also, if the unemployed are better off than the employed in the U.S. (who live on minimum wage) is it fair that they get to live well and not work while others do work? Do you think too many people in the U.S. would not work if we gave them that much money to stay home?

I just read that Norway is a tiny country with a very large commodities asset base (and they fish and whale a lot but what about the effects on the world's oceans?) and it is also one of the most expensive countries to live in the world. Many Norwegans are concerned about their countries dependence on petroleum in the future. Also, at one time they had the most agressive progressive taxation in the world but apparantly they have been decreasing progressive taxation...wouldn't that be unequal?? Why do that? They currently tax food at 14%, transportation at 7% and pretty much everything else at 25% with a value added tax. Doesn't that seem unfair? Sales taxes are often criticized as being regressive.

Social Democracies believe that people (particularly their citizens) have certain fundamental rights, including food, medical care, shelter, education and dignity. One works for the extras and luxuries above these basic rights. Unlike the USA, owning a private car is not considered a necessity (very good public transport and the King of Norway takes the streetcar, although he never has to stand :-). And unlike the USA, the emphasis on housing is not McMansions (gauche) but on location and having a "summer home" for nice weekends.

By almost any metric, the Nordic Social Democracies are the most successful societies in the world.#

The Moderate Party of Sweden## inherited a large budget surplus from the Social Democrats. Paying off 16% of the national debt/year, which they felt was too fast. So they cut taxes. But unlike US Republicans who focused the bulk of their tax cuts on inheritances and the highest incomes, they only cut taxes on the lowest quartile of taxpayers. The idea was to increase the incentive to work and stay off the dole by letting low wage earners keep more of their income for the extras and luxuries of life.

BTW, if I lived in a Social Democracy, I would not be a SD, but would support one of the parties that wanted to "tone it down a bit". That likely explains any changes in Norwegian taxation. With subsidies, everyone still gets the necessities of life depite the taxes.

Norway has not spent their oil income, they still "pay their way" with other taxes and have over a quarter trillion invested. So they are not dependent on oil income, but servicing the offshore oil industry has become a major part of their economy.

Below I have copied Jante Law.

Alan

# It is interesting that the main rival to the title of the most successful society in the world is the most conservative nation in Western Europe, Switzerland.

## TOD poster Magnus Redin works for the Moderate Party of Sweden. He is the technocrat in charge of evaluating energy & environmental policy proposals from the politicans. He is strongly in favor of that $1.2 billion tunnel under Malmo because it adds to the long term national wealth and helps Sweden improve it's non-Oil transportation system. Please note that this government public works project came in over 9% below budget.

Jante Law

The poet Aksel Sandemose put Jante Law into words and they convey an important element of Norwegian culture: humility. Jante's Law teaches people to be modest and not 'think big'. It is demonstrated in most people's refusal to criticize others. Norwegians try to see all people as being on equal footing. They do not flaunt their wealth or financial achievements and look askance at those who do.

The tenets of Jante Law are:
. You shall not think you are special.
. You shall not believe you are smarter than others.
. You shall not believe you are wiser than others.
. You shall not behave as if you are better than others.
. You shall not believe that you know more than others.
. You shall not believe that you can fix things better than others.
. You shall not laugh at others.
. You shall not believe that others care about you.
. You shall not believe that you can teach others anything.

Egalitarianism

. Norwegians view themselves as egalitarian people whose culture is based on democratic principles of respect and interdependence.
. They like people for themselves and not for what they do for a living their professional accomplishments or how much money they earn.
. They have simple tastes and are not prone to ostentation or excessive showiness.
. They pride themselves on being honest and sincere in their personal relationship

I will repeat my oft-posted anecdote for the knee jerk, no-really-there's-enough-pie-for-us-all-to-be-well-off crowd:

A neighbor and his wife did an analysis (some years back now, but surely no different now) of the total REAL tax paid by Americans vs., I believe, Swedes. The result? The same tax level, much less for it.

Those who think the American system is the best it can be and has ever been are damned fools, imo. How wide is the income gap now? How many poor? After how many centuries?

last time I read a survey rating happiness by country--I won't bother to try and recall their methodology or how hapiness was defined--surprisingly Mexico was rated happier than any of the countries being mentioned above.

Does that mean that civilization and society haven't collapsed, so long as a handful of people still care about 45 nm VLSIC's?

Sorry, I don't think most people would know what a nanometer is. More likely, lack of collapse is defined by whether they are able to get to Facebook and read what their friends have done in the past 30 minutes.

No bright fiery lights will come on in the sky to announce the changeover from general non-collapse to collapse, so I suppose one can indulge freely in tendentiousness while defining it.

Be that as it may, there's nothing new about cruel, incompetent, murderous petty kings, warlords, and dictators such as those torturing the inhabitants of the cities you list. They have come and gone regardless of general conditions of collapse or non-collapse. All that's really needed to sustain them is an ongoing supply of volunteers who will submit to anything rather than embrace freedom and thereby risk revealing themselves to all the world as feckless misborn rubbish. They serve as an army of enablers, helping overcome opposition through sheer force of numbers inasmuch as they have nothing else whatsoever to offer.

So, while this is all exceedingly unfortunate, it's also normal ongoing banality, part and parcel of random variation ever less restrained by natural selection. It doesn't bode well for the future, but nothing in it indicates imminent general collapse.

I guess BAU means you hear about the suffering from afar, like always. That hasn't changed - but how about the fact that it's now affecting one billion people, and rising? Does the "normal ongoing banality" of evil also grow infinitely in a finite world, or is a phase boundary inevitable when the victims number, say, two billion? Three? Or does it warrant the same verbal shrug irrespective of the number, so long as it doesn't touch us personally? Other than providing us a ready source of cheap shoes, that is.

I think that the thing we need to keep in mind is almost all of the financial analysts we read from other sites don't understand peak oil, and they also don't understand the expected impact of peak oil on the credit system. As a result, their forecasts are basically what would happen in the absence of peak oil--interesting, but probably not very accurate.

The presence of peak oil in the equation means that the recovery is going to be muted, at best, because if oil prices go up in response to increased demand, it will likely send the economy back further into recession.

The force of peak oil in pushing toward a credit unwind is another issue all together (because economic growth is needed to support growing debt). To the extent that it occurs, it can be expected to have a further downward impact on the economy. The impact will be such as to reduce oil prices (and other commodity prices), because of reduced demand, and reduced profit levels for companies. Most people will not associate the continuing credit unwind with peak oil, and in fact, because of reduced demand, will assume the issue is something else all together.

My view is the future will look somewhat like a stairway down, with plateaus followed by further steps down (similar to what aangel is forecasting). Right now we are on a plateau. If some little thing comes along to start unraveling things further (bump up in oil price to much above $80 for long; credit default in a major country; bump up in interest rates worldwide; inability to sell treasury debt to foreigners) we could start the next leg down.

Hi, Gail. I'm a little late to the party but this looks like a good time to put in a graph (picture worth a thousand word and all that):

Heck, I'm feeling graphy today so here's another one based on Sam and Jeff's work:

For an excellent example of how quickly things can unravel, take for instance how I post my pictures here. I use a service, called Photobucket, that displays them for free, thus saving me (and TOD) the bandwidth charges. When that company goes bankrupt all the pictures I have posted will disappear from all the posts.

In other words, an immediate and instant drop in value.

Now, imagine if we follow the current thinking in the computer sector called "cloud computing." In that situation, not many services are run by the companies themselves. Virtually everything is outsourced and connected to across the Network (like Google Docs).

When these services go bankrupt, I suspect that the companies that relied on them will find that they can't easily replace the functions they provided (if they can even get their data in time), will struggle, then fold.

In other words, "cloud computing" is the pinnacle in high-connectivity networks and will, in my estimate, make the collapse much faster than the gradualists think it will occur.

The unpleasant reality is that the whole economy isn't that far away from the "cloud computing" vision as it is.

Not taking anything away from Sam and Jeff's work at all, but doesn't the second graph "The Great Oil Squeeze" imply business as usual continuing, at least for oil exporters, until the zero date? I find it inconsistent with the first graph "The Early Staircase Model". Why wouldn't a quick and early economic collapse also do away with demand for oil, amongst other things, in the oil exporting countries too?

The following article is about Afganistan, and has this interesting tidbit: "The consideration then had mostly to do with U.S. interests in seeing oil and gas pipelines constructed in transit through the country. It cannot have been coincidence that President Bush’s special envoy to Afghanistan following the overthrow of the Taliban was Zalmay Khalilzad, who had previously conducted risk analysis for Unocal, the company trying to woo the Taliban and heading the consortium to establish a pipeline across Afghanistan until 1998, when company Vice President John J. Maresca testified to the House Committee on International Relations that unless there was a change in regime, no such pipelines could be built."

Sometimes I think I may be overstating my case that the wars in Iraq and Afghanistan are de facto subsidies for oil. The link makes it clear that it is all about oil and terrorism is the cover story.

It's no wonder Bush/Cheney et al looked at 911 as a godsend. And it also explains why Osama bin Laden is still on the loose. Without the constant terrorist threat there is no saleable justification for the wars. The wars will continue until the oil is flowing in the American direction. It's that simple.

Silly me for thinking it was was about terrorism when I frequently justify ethanol subsidies in light of oil subsidies in the form of wars for oil security among others. Evidently Obama has bought into it too. That is why he doesn't see Afghanistan as a quagmire. The prize is the oil flow finally coming out and that is victory.

In this view the cost in blood and treasure is worth it. At least for the Empire and oil companies who do not have to bear that cost.

It is sad that even here, we carefully tiptoe around the war propaganda on TV.

From TAE, here's a partial list of empires that invaded Afghanistan. The most recent two on the list occurred in modern times, and so they too were accompanied by propaganda campaigns about freeing the common folk from tyranny, bringing stability to the region, yadda yadda.

The Union of Soviet Socialist Republics: 1979-1989
The British Empire: 1837-1919
The Mughal Empire: 1525-1709
The Timurid Empire: 1370-1506
The Il-Khanate: 1245-1332
The Mongol Empire: 1221-1245
The Khwarezmid Empire: 1215-1221
The Delhi Sultanate: 1206-1221
The Ghurid Empire: 1186-1202
The Ghaznavid Empire: 970-1186
The Abbasid Caliphate: 750-970
The Umayyad Empire of Arabia: 637-750
The Tang Dynasty of China: 620-637
The Hepthalite Kingdom: ca. 400-580
The Sassanian Empire: 224-561
The Kushan Empire: 135-240
The Kingdom of the Western Satraps: 020-405
The Indo-Scythian Kingdom: BC140-AD020
The Greco-Bactrian Kingdom: BC250-BC048
The Mauryan Empire: BC305-BC232
The Seleucid Empire: BC323-BC250
The Empire of Alexander the Great: BC328-BC323
The Archaemenid Empire: BC550-BC328

I doubt they could have kicked out the soviets except that they were stressed out and we sent over quite a few antiaircraft missiles that made life very hard for the soviet air flght crews.

Generally the only way to whip somebody like the Afghans is to be able to put enough people on the ground to destroy thier food shelter and fuel supply and deprive them of a living.

The country is so big and rough and remote that nobody has ever been able to do that on the ground given the lack of roads and the distances involved.

But nowadays any country ruthless enough to do so and in possession of a large modern air force so could defeat them from the air by destroying thier food supply.A little weed killer goes a long way.

Long live the Afghans .

But we are in the middle of a very high stakes poker game over there and we can't drop out.That way lies immediate disaster.There is some chance that we can gaurantee our access to the oil around and about the area and leave , but it's only a slim chance.

My estimate is that we will keep a large force in the general area until we either simply are unable to do so, or until the oil is about gone, or until renewables are good enough to scale up and replace the oil.

Most likely we will be engaged in some real arm twisting diplomacy to ensure that a substantial amoun of oil continues to flow this way as production begins to dry up.Thais kind of diplomacy is often backed up with an iron fist suitably disguised in the velvet glove of diplomacy.

But we are in the middle of a very high stakes poker game over there and we can't drop out.That way lies immediate disaster.

It has been an immediate disaster since October 7, 2001 and will stay that way until we leave. If we double down there the road leads to our forces tearing around in the land of the Paks. We need to quit while we are behind...before we disappear completely into the muck.

Gotta love how so many people have bought into this 'high stakes poker game' of permanent war.

How many folks out there think we have 'fixed' the Iraq with our surge? Their eyes will open if we never leave, and if and when we do leave. Lots of folks believe in throwing good money after bad in the sucker's hope of turning the corner...

Know when to hold'em...know when to fold'em...know when to walk away, and know when to run...

"But nowadays any country ruthless enough to do so and in possession of a large modern air force so could defeat them from the air by destroying thier food supply.A little weed killer goes a long way."

LOL (and then roll on the floor gasping for air as you spit bloody bits of your lungs onto the linoleum)

Exactly how much 'weed killer' was sprayed on the jungles of SE Asia, and with what marvelous effect?

It looks as though you've given up on the "winning hearts and minds" strategy?

By the way, much of the "by the air" strategy is being conducted not far from here by nine-to-five types who operate the drones patrolling and on occasion bombing the territories. These poor saps have higher burnout rates than the grunts living the reality on the ground day to day. The unreality of conducting a war from an even further distance than a high altitude bomber is lacerating their psyches.

In their meeting yesterday, 3 Dec, the California PUC approved the application by PG&E to enter into the SPS contract with Solaren.

Here's a link to the PUC resolution. The page has a link to the resolution for PG&E's PPA application, which gives few background details of Solaren's proposal. No technical details of Solaren's technology are provided.

“I’ll be the first to admit that our reach may exceed our grasp in this instance,” said Michael Peevey, president of the California Public Utilities Commission, which unanimously approved PG&E’s agreement with Solaren on Thursday. “But in the words of poet Robert Browning, ‘A man’s reach should exceed his grasp, or what’s a heaven for?’ “

All the details of the design were kept under seal and what little was included with PG&E's application was REDACTED. Where's that basic requirement for OPEN GOVERNMENT in a democracy? And, why is PG&E signing on to support a basic research project in an unproven technology? Nobody outside of Solaren and PG&E knows what their design is supposed to look like, let alone the details. But, that's OK, as PG&E will be able to capture any stranded costs after construction begins. Those costs might sink California's energy users, but, what the heck, it's for a good cause, right?

EDIT: The Solaren CEO, Gary Spirnak, used to run the Space Shuttle launches for the USAF. Here's a few more details. Note the reference to the Japanese project to build a 10 MW system, one which has already raised eyebrows regarding thermal control. And Solaren says they are going for a 200 MW system on the first shot?? Keep moving, keep moving, don't read between the lines...

I attended the opening of Mike Ruppert’s new movie CoLLapse last night in Portland, and here are my observations.

Foremost, it was no "rant." The tone was far more measured than that taken by a Kunstler or a Denninger on a bad day.

The theater was only about one-third full for the 4:30 matinee, but it was encouraging to see so many twentysomethings in the audience.

The story presented in the film was complete, concise, and cleanly edited, and I had no issues with anything Mike said in it. He could have made some points more clearly, like for example that hydrogen is not an energy source, only a carrier for energy that has to come from somewhere else. But for 84 minutes total runtime, the film packed plenty of information and tied together the diverse topics.

I won’t go over the whole debt/energy/population peaking story which is the movie’s thesis, because if you read The Oil Drum you already know it. I’d say that the film is a good introductory tutorial, detailed enough to be complete without being didactic or overwhelming. I found it to be more compelling than Martenson’s The Crash Course due to Chris Smith’s superior production values.

Afterwards Mike answered our questions at length, and his main point could be summarized as “Calm down.” In an age of declining energy and bankrupt states, no one is going to declare nationwide martial law, nor will the government try to confiscate your gold, guns, or whatever. If you want to plan for a brighter future, secure your local food supply and buy SEEDS.

But he does expect that after a year of a massive deflationary spiral we will see hyperinflation of all the fiat currencies, and after that it’s anybody’s guess when and where the wars and famines will break out. Here he differs significantly with Ilargi & Stoneleigh at The Automatic Earth, because the latter predict the deflationary period will take several years. Then again, TAE is much more narrowly focused on finance, and Mike may have something to say to them about the primacy of energy in every essential aspect of our industrialized world.

Mike says he has finished with his peak oil outreach work: the debating, investigative reporting, and speaking truth to power. He seems overjoyed with his new life writing and performing music - singin’ the blues, quite literally.
Check him out at http://www.newwhitetrash.com/

I gave away my copy of Crossing the Rubicon some time ago and his new book hadn’t been delivered in time for the Portland showing, so I was at a loss for some way to capture his inscription. And then I had an inspiration, pulling a $100 bill from my wallet. Mike drew a mustache on Ben Franklin before signing his autograph. Maybe that bill will actually retain some value!http://tiny.cc/yiajc

As for helping plants and animals, British climate scientist Martin Parry said the world will have to create a triage system to figure out which living things can be saved, which can't and are effectively goners, and which don't need immediate help.

They go on to talk about relocation of island populations as part of adaptation. My guess is that the triage concept is going to be needed for whole populations of people as well as species of plants and animals. How do you put a dollar value on that?

The article is about adaptation to global warming caused climate change and sea level rising. But what astounds me is the fact that few planners who are thinking about this seem to have connected the realities of reduced energy supplies right at the time we will need MORE energy to effect the adaptations. It is a very troubling confluence of forces. Dare I use the trite analogy: a perfect storm?

My screen saver is the floating phrase: "Adapt or die". Have had that going for a couple of years. Freaks my sons out when they see it.

What a bad joke: Instead of behaving like responsible stewards, let's turn the remaining natural world into a zoo. After all, humanity has done such a good job so far preserving species - maybe all we need is some corporate sponsorship, replete with fuzzy mascots.

implicit in the concept of "triage" is the conscious choice to let some creatures die. And what species is over-represented with redundant individuals right now?

Whatever happened to the idea that an ounce of prevention is worth a pound of cure? As a species, we seem to argue endlessly that the ounce isn't necessary or we just can't afford it, and then happily come up with elaborate plans for the next generation to pay for the pound of cure that actually won't cure anything at all.

There is always an assumption in thoughts like this (triage of the natural world) that leave me uneasy.

While I agree that all organisms must constantly "adapt or die", there is a level of arrogance that humans seem to constantly display that this phrase does not apply to us (most on this site being the exception). But, further, within this talk of "triage" is the assumption that we are in control of the natural world - or, at least capable of being in control of the natural world. I consider that control to be an illusion.

Certainly, for short periods of time and over very limited scope, we are capable of some small level of control. But, the assumption always seems to be that we are capable of unlimited control over the natural world and ourselves. I just don't see any evidence of it.

There are many humorous things in the world - among them, the white man's notion that he is less savage than the other savages.

The nifty thing about triage is that when applied recursively it still generates an exponential decline. If we triage now, and then again in another 20 years, and then again in 2050, we'll have successfully destroyed most of the species. And, at that point what started as the top 10% would then compose the top half or so, so at least we'll only need to protect species we all really like.

The equally unsettling point is that we'll quite soon face triage for humans too.

The equally unsettling point is that we'll quite soon face triage for humans too.

To me, triage suggests a choice is made to save this one and not that one. Except as a result of other choices that are made, I don't see triage for humans happening through conscious choice, but as a result of those other choices. Triage will happen, we just won't really be doing triage on humans.

Who would be in charge of making these choices? I imagine that our collective choices as a species throughout history will be what is in charge of making these choices.

Yes, like you I think our belief that we can be in control is an illusion. But it is one shared by most of TPTB. What I meant by triage for human populations was that instead of relocation of whole populations, paid for presumably by the developed countries, our leaders will be faced with letting some die and trying to help others. This is because we will not have the energy needed to relocate everyone threatened by destructive climate change. It is almost a sure bet that people in the United States will not acquiesce to higher taxes to fund relocating whole African nations suffering drought and starvation. The sentiments here are more along the lines of 'We earned it fair and square; we get to keep it and spend it on ourselves!'

So decisions about who lives and who dies have actually already been made, in a sense. Our leaders may put on a show of making hard decisions when the time comes, but those will be rationalizations, not the kind of considered, informed decisions doctors make in the ER, or officers make in the battlefield.

So decisions about who lives and who dies have actually already been made, in a sense. Our leaders may put on a show of making hard decisions when the time comes, but those will be rationalizations, not the kind of considered, informed decisions doctors make in the ER, or officers make in the battlefield.

I think this gets to the heart of the matter. So, isn't "triage" the wrong word?

It seems to me (and you allude to it) that instead of making a choice to save this one and not that one, we in the developed world (and especially the U.S.) will be making (and have already made) a choice to save us and not them (or, perhaps, save as much of our way of life as we can and let others fend for themselves). I don't agree with it, but that seems to be what we're doing and will continue to do.

But, aside from the semantics, the real focus (as you point out) should be on the fact that dwindling energy inputs will remove some choices from the list. The longer we wait, the more choices will be gone, and the higher the costs of the remaining choices.

However, any government or politician who tried to make these difficult choices now would face an almost insurmountable disagreement from the current inertia of BAU. I don't see a way that these difficult decisions will be made until we are forced to make them (meaning that the choices will be between a distasteful choice or a much more awful choice). Humans just don't operate on long-term ramifications. Short-term always trumps long-term.

Agree to all Mark. I only used the word because that's what was used in the article. A bit of irony. TPTB, if they do anything at all, will try to make it sound like they are making the hard choices when TSHTF. But let's face it, politicians are never going to say something like: "My fellow Americans, we need to suck it up so that we can send relocation aid to half a billion Africans, some of whom will have to move here." Can you imagine what the typical right-wing response would be? But I bet the left would find some reason why we shouldn't do anything as well.

I've been watching with interest how Obama is handling Afghanistan and Iraq. Pull out troops from Iraq and let them fend for themselves after we thoroughly screwed up their country (no I didn't care for Hussein either) and now do the same for the Afganis. In the end we will retreat and leave them to fend for themselves. The decisions for what to do down the road have already been determined. Not by active decision making, but by indecision now. The options, as you say, are narrowing all the time.

"Triage" can't be done - unless the plan is only to keep a few species we can eat - cows, sheep and pigs, maybe. Then, what will they eat? What will their feed live on?

Life is all interconnected - trying to "select" a few to continue and leave the rest to die will kill the entire planetary system - with the exception, possibly, of microbes, nematodes and the cockroach.

If we lose pollinators (I've said this before) we lose flowering plants. Unless people want to pursue the Chinese method of hand pollination with brushes.

If we lose flowering plants, well - we'll still have a conifer for the holidays, but not a lot else.

I remember having a long (and very unsatisfactory) argument with someone about why mosquitoes are necessary. Yes, they do have a purpose.

Look at the trouble we're in for trying to eradicate a few bacteria and viruses...(bubonic plague, polio, colds & flu etc etc)... too many people.

OFM
My genetic allotment of years is somewhere between 48 and 60, without modern medicine (congestive heart failure). My mother and grandmother both had pacemakers. Maybe I'll have one, if I can afford it, at the appropriate time.
Maybe years of attention to diet and exercise will help.

I'm "in the window" though.

I'm sure if modern medicine is available when I should need it, I'll take advantage of it. If there's insurance. I already had laser treatment for holes in the retina (genetic heritage from my father's side).

I expect to live to see the worst of peak oil, and probably some relocations from climate change. Who knows what medical treatment will be available at that point ?

Maybe the bank will keep me connected to the machines until the mortgage is paid in 2038 ;)

I took that test myself just so I could come back here and tell you, and the rest of the board, what a load of hooey it is.

It says I'll live to be 82.

In truth, I'm 47 and anything beyond 10 more years is going to be borrowed time. The last member of my family that lived up until their 80s was my Grandfather, and lifespans have been progressively shorter with each generation as we have fallen in social class - the same as is happening to everyone else in the US.

I too have read Kurtzweiler; it is encouraging. The problem is that we are now in a race to establish sustainable power sources to keep up our doubling of info-tech [Moore's Law and all that], and our real problem is that we are probably losing.

Ray's solution is very energy intensive. We are running low on power. I hope Kurtzweiler is correct and we can "tech out" of our energy problems. Like lower tech solutions that could have worked if begun 20 years ago, it would take a level of resolve that seems sadly lacking. 2020 is, IMO at least, too late.

Just one final note, this about the employment news today. Total unemployment rose during November. In 'normal' years it drops. Rate of unemployment dropped about 0.2%, but just because the spinmeisters reduced the base of employable people by the numbers who they claim got discouraged and didn't look for a job for the last 4 weeks. The "official" rate only counts those who are 'looking.'

Furthermore, the only real increase in employment came from temporary jobs. Temporary! So, the news is still not very good. Bankruptcy filings continue to rise, though the US Bankruptcy laws were altered to make it much more difficult. Foreclosures are rising, despite government programs designed to prevent that. The only statistic that looks good is the real estate sales pending list, which was one of the few areas of the US Stimulus package that bore fruit. First time buyers are taking advantage of the credit... for how ever much longer that will be continued.

I guess I remain in the doomer group for now, but I am looking for a ray of sunshine. The BAU bunch always rains on my parade.

Today's unemployment rate number has to be one of the most bogus statistics ever issued out of Washington, and that is saying a lot. It will certainly be revised substantially upward once the effort to generate optimistic feelings amongst holiday season shoppers has ended failed.

I continue to predict that January will be a bloodbath in the retail sector, the country will be just stunned at the store closures, bankruptcy, and job losses.

Observer, since you have been following retail, have you seen any stories on the impact of sights like Craig's List on retail. I am selling a basketball hoop now on Craigslist. I am sure a lot of people contacting me would have in the past gone out and bought new. By recyling of items via Craigs List there will be less retail activity. But there will be less cash leaving for the mfg. in China. And less oil being consumed. And less carbon for those who care about such things.

I continue to predict that January will be a bloodbath in the retail sector, the country will be just stunned at the store closures, bankruptcy, and job losses.

I agree, with a vengence! Consider, the average small retailer works on about a 20 to 25% profit margin. From that she squeezes out rent, utilities, hired help, insurance and a living.

The average retailer sells to local workers. In America, before the 'recession' began our unemployment rate was stated as 4.5%. Of course, that was a fudged number because 28 years of criminals have run our country. But, today it is stated at 10.0% [down from 10.2%] of the 'work force.' The work force, itself, has diminished, while population has grown, so that number is double fudged. Real unemployment is more on the order of 20% to 25%, and perhaps a bit more than even that if you count everyone who would work if there were jobs available.

So, how does that impact retail sales? Well, the workers also happen to be the consumers who are supposed to support our economy. Don't try to tell the BAU people about this connection. They don't get it. But it is true. The people who work here are the people who buy things. Their jobs are down about 12% from the start of the recession - maybe closer to 20%. If that was all, retailers would be in serious trouble. That would take sales down 12%, and they would be looking at 8% margin after making their pre-Christmas purchases, with left over merchandise. Of course, many retailers saw what was coming, and did not make as many purchases of goods for sale. They MIGHT survive the coming month; many can not and will not. Because, you see, the average retailer sells discretionary goods. And, in addition to jobs being down, pay is down as well. By about 10 to 15%. Start adding up the figures. The retailers are trying to induce people to spend grocery money to purchase Chinese plastic games.

So, retailers are in trouble. This will about finish off many of them. Their slots at the Mall will be empty; the storefronts in those towns blessed with such as well. Rents will not be paid. Commercial real estate is a 5-year financing business. In fairly short order about 1/2 of all commercial financing will come due, and with no one to pay rents, the owners will come up empty. This is the next big hammer to watch for. And, like you, I see it beginning in January!

Our President's answer: send 30,000 more troops to Afghanistan to maintain a presence near the oil. Let those Arabs know we mean business. As usual.

I have been ripped on this before. But I think when we come out of this we will have the biggest golden age the world has seen. I know billions of people coming out of poverty freaks the global warming types out. But I like it!

My daughter works for one of these small retailers that one would think would be ground zero for the disaster noted above. I was speaking to the owner the other day and she said her Christmas season started earlier than past years and she is on schedule for a decent year.

OK, for some good news in these dreary times. Did you guys see the article yesterday about the Hungarian cave dwellers who will inherit $7 Billion dollars? I loved that article.

“If this all works out it will certainly make up for the life we have had until now — all we really had was each other — no women would look at us living in a cave,” said Geza.

“But with money, maybe we can find a partner and finally have a normal life. We don’t know yet if she even told our grandmother about us. I understand it was only while they were carrying out genealogical research that lawyers found we existed.”

she said her Christmas season started earlier than past years and she is on schedule for a decent year.

Every business is unique, and there are many different goods and services sold in America. My perspective comes from retail sporting goods. some sporting goods might sell well, so a retailer specializing in, say, outside gear, camping, fishing, etc., things may not be as bad as one whose forte is golf and tennis.

Clothing would be another story - luxury clothing might not fare so well as general durable types. Toys and electronics are their own genre, and will have their own strengths and weaknesses. All share in the limited funds available to their customer base. Those whose customers are wealthy may prosper, those whose customers lost their jobs won't stand up as well.

And, every business itself, within its niche, is a particular instance. Locations vary; cost containment varies - many have laid off their workers, and hired fewer than normal, or cut back on purchases of goods. What I speak of is an averaging.

I am happy for your daughter... she may still have a job come February. For many small business, though, between government regulation, cost increases coming from utilities, transportation, etc., insurance and health care increases and the like, together with the rationing of money that we have and will continue to see, this will be a hard time. Some simply will not make it. With the landlords' loans coming due and credit narrowing, commercial real estate looks weak at best.

I know of a glass company that has been hiring (one by one 4 new employees this year plus a replacement employee for one that left). The 3rd generation replaced the 2nd post-Katrina (they decided to retire instead of rebuilding).

New tactics, new markets, new equipment (German CNC glass cutting machines). When they get a low ball bid from a supplier for a major commercial job (think post-K, glass), they asked if they could offer the same prices for their small customers. So far, the suppliers are still honoring their "low ball" prices. I bought quite a bit of low-E single pane tempered glass from them under this deal from one supplier.

But the other glass companies are laying off (I think one nation wide firm closed their branch here).

What, you did not think that was a good story? Two brothers have nothing but themselves making a living salvaging scrap metal and they inherit $7 Billion. That is a great story. You think it is "bizzare?" I don't get it.

80% or so of the national news is fluff that I just tune out. Tiger Woods, 2 brothers, latest poll on Obama, party crashers, etc. I read or do something else for those seconds.

If it will not have a significant impact a decade or more from now, I prefer not to spend any time on it or even know it existed. I did not know about the two brothers before hand and now regret even knowing about it. A waste of my time and memory.

I'd rather you not post off-topic stuff like that. If it's somehow related to energy and our future, fine, but random "odd news," "heartwarming stories," the latest about Jon and Kate, that cool YouTube video, etc., should be posted someplace else.

In St. Louis, calls itself the Gateway and is centrally located, ...there I went to several shopping malls.

The parking lots were quite empty. The employees were 'dogging' potential customers. Sears was fairly empty. Macys was also and the cosmetic girls were standing in queues to grab at potential customers.

I foresee, based on those observations, that a huge bloodbath in merchants is coming. And coming rapidly.

Many went out and grabbed up the Black Friday merchandise that the clerks said was marked down by half. They were NOT buying any more that I could see.

"..and if it continues to hold until 2020, we’ll then have machines approaching human intelligence."

Of course, I have to think that might be as much a problem as a solution.. but of course, it makes the convenient descriptor of intelligence as some kind of quantity to be reached. There are fiendishly intelligent humans out there who make me want to go find some friendly flakes and bimbos to hang out with.. some intelligence is not even worth the effort..

Because one, it is not "propaganda" (that is what Exxon buys for the deniers).

Two, there are basically two paths to deal with post-Peak Oil; one that boils the planet (see Hirsch, CTL, oil shale, tar sands) and another that reduced CO2 and uses oil and energy generally more efficiently (insulation, solar water heaters, wind turbines, electrified railroads, Urban Rail, bicycling and walkable neighborhoods).

There is an intimate relationship, on several levels, between oil and climate change. Both will have severe impacts on humanity.

I don't have a problem with posts on life post peak either. I like that discussion too. But the first sentence in today's news summary was "Planet Earth is in imminent peril. We now have clear evidence of the crisis...." Blah, blah, blah. scare, scare, scare. I stoped there and did not read any of the other stories.

there are basically two paths to deal with post-Peak Oil; one that boils the planet (see Hirsch, CTL, oil shale, tar sands) and another that reduced CO2 and uses oil and energy generally more efficiently (insulation, solar water heaters, wind turbines, electrified railroads, Urban Rail, bicycling and walkable neighborhoods).

Both of these suggested paths will not work, but I am almost sure we will try the first one with a bit of the second one until... well ask Darwinian about that.

However, I do agree with "Not a Rockerfeller" that the drumbeat is seeing ever increasing content concerning "Climate change". I come here to find out about oil depletion. Other blogs do climate change much better.

If I assume that path one is what we will take, then I can go to realclimate.org or other blogs to find out about impacts to the climate.

If I want know if path one or path two will help, I find TOD is much more helpful.

OK, since you guys all read these warming and sea level studies. I want to know why the oceans have not risen one milimeter where I live. I keep hearing about 10 feet per century, etc.

If that was the case, when I am stolling hand in hand with my dear bride through Newport Beach, the water would be coming over the sea wall at high tide. 25 years ago when I was courting my wife I was amazed at how high the water was on the sea wall. Well the water should be coming over the wall by now but it is not.

Did you really thing the climatologists hadn't thought of this? Dude, they've been looking at CC for over a hundred years. Yes there are things to sort out on the specifics of things, but the basics are pretty well covered.

So, for example, those people in the IPCC [Intergovernmental Panel on Climate Change], choose Hong Kong, which has six tide gauges, and they choose the record of one, which gives 2.3 mm per year rise of sea level. Every geologist knows that that is a subsiding area. It's the compaction of sediment; it is the only record which you shouldn't use.

I doubt the veracity of anyone you post on the face of it. if this post is accurate, it would literally be your first honest post.

More importantly, if you think one tide gauge wrecks the whole set, you're mistaken. Further, if it's an area of subsidence, they likely know that. The rate of subsidence can be quite accurately determined... and subtracted.

If they don't know that, be a good little boy/girl and tell them. I'd be willing to bet it will be corrected for if you do.

Mörner: I am a sea-level specialist. There are many good sea-level people in the world, but let's put it this way: There's no one who's beaten me.

at the beginning of an interview sounds like a bit of an egomaniac, to say the least, that sounds like something a late 19th century scientist would say in a movie. It would be good to see his actual work out their being debated but when you search all you come up with is a bunch of links that bring up this same interview and a few that merely attack it. Not very helpful, but typical of google searches, they follow the latest herd every time there is a stampede small or large.

By the way you never came back on whether or not you tried the feet in boots cold/hot experiment. Here is the link to the actual report on the condition of the Beaufort Sea ice submitted by Barber and Co. this fall. It is worth reading, one of theses days I'll get it out in a fresh conversation. Don't know how to lift graphs from PDF files or I would post them.

It doesn't take too much study to see that the impacts we are witnessing are all part of a giant system. That's why so many different topics are covered on the Drum Beat and on TOD. Sure, it's called "The Oil Drum" but that's just a hook to sneakily pull you in so that you learn about the big picture. ;-)

The founders of TOD could have called the site "World System Dynamics with a Particular Emphasis on Energy Flows of Hydrocarbon Origin" but if I recall correctly their marketing and public relations agency thought "The Oil Drum" was catchier.

Add to that that conversations are like the weather: they just happen in our society. One day it's Madonna, the next it's Saudi Arabia's sovereign wealth fund. Right now there is a downpour of "climategate." Wait a few days and the shower will pass.

Besides, after being here some two years, it's quite clear to me that Leanan is skilled in pulling in the relevant stories for both the big picture people and the details people. In my view, she's doing a fine job and doesn't need to change a thing.

I agree that Leanan does a great job at filtering stories. Besides, James Hansen is not only a well respected scientific voice that raised early concerns about climate change, he is also a strong advocate of nuclear energy to replace fossil fuels, which is central to the TOD discussion.

And it's not really that hard to skip stories and threads of discussion that isn't of interest (in fact, doing that is kind of necessary if one wants to do anything else besides read TOD...)

As far as points of view goes, I think Leanan links to as many different views as possible. Yergin gets links all the time, even though most here think he's wrong most of the time. It gives us a look at what the other side is saying/thinking - an important part of analyzing anything, I think.

As for links to global warming, I think that a discussion of the burning of fossil fuels and future availability relates quite closely with the effects that burning has within a closed system.

I really appreciate the stories as well. So I offer my thanks. But, has she included Climategate articles to the extent global warming fear mongering articles get listed? I have not been reading TOD much in the last week. But from what I have seen, there have not been many articles on it.

I've posted a few "climategate" articles every day since it started (including today).

I don't feel the need to post them all, or even a lot of them, because it's being well-covered in the comments. If an article is posted in the comments, I try not to post it up top as well. (Occasionally there's a cross-post, or I don't notice someone posted it earlier.)

Some discussions are just plain tedious, because many people have strong feelings, and no one ever changes their mind. The discussion gets repetitive, and drives people away. Religion, politics, and climate change are among them. There are times when I wish I could ban mention of all three of those from the site.

But I can't. They are interconnected, and will play a big role in how we deal with peak oil.

As an example... Religion has traditionally been the way we deal with resource constraints. (There's a reason the major religions all have restrictions on meat eating.) Greer understands this; I suspect this is why he's an archdruid. He picked the religion he thought would be most useful during the Long Emergency.

Arguing about whether god is real, which religion is the "true" one, etc., is pointless. I don't want that here. But discussions of how religion can help or hurt our transition to the post-carbon age...that's not pointless, and is very much on-topic.

Similarly, we are not RealClimate, and don't try to be. (Though this site was modeled on theirs.) Climate change is different from peak oil. Peak oil is being ignored by science, so there's room for amateur efforts like ours. Climate change already has a lot of well-qualified scientists working on it. There's nothing we amateurs can really add.

But...the effects of climate change, and climate change legislation, are very much on topic. For example, Connecticut is wondering whether it makes sense to keep maintaining a rail line running along their coast, when it might be underwater in a few years. Nuclear power plants have had to be shut down due to drought.

Monitoring oil production was interesting and useful when the economy was doing well and everyone was pumping all-out. Now, we still do it, but it's much less interesting, because it's the economy, not geology, that is shaping the curve.

That curve might be further affected by climate change legislation. For instance, Japan wants to enact a "green tax," which will presumably affect consumption - and hence, production.

Even if we want to focus like a laser beam on oil depletion...we still have to consider climate change.

"But...the effects of climate change, and climate change legislation, are very much on topic. For example, Connecticut is wondering whether it makes sense to keep maintaining a rail line running along their coast, when it might be underwater in a few years. Nuclear power plants have had to be shut down due to drought."

If the climate change discussion could be kept within these parameter, this is fine. But the posts by out and out climate deniers and the refutations they spark indeed gets wearisome. These last could be deleted/banished without impairing the relevant discussions you refer to.

I tend to skip over a lot of the CC content, but I'm glad it's tied into this conversation.

I think these two problems are especially interconnected and salient to be discussed together. The think TOD does that I keep coming here for, is exactly that kind of linking, where you hear about these complex interrelationships between Oil, Finance, Environment, Health, Food Supply, Popular Concepts and Misconceptions, Alternatives and wannabes, etc.. (Oh No! Did I forget to mention Nuclear, Population and Religion? What was I thinking? Those are the BEST!)

I don't need a discussion held by specialists on just one of these, I need to look at how each of these tails is trying to wag the next dog in line.. Connections..

I agree, and three cheers for the generalists! We cannot all be experts in everything, but to focus on just oil depletion as if it existed in a vacuum would be a complete distortion. The discovery and use of fossil fuels enabled massive population growth, which in turn put tremendous pressure on ecosystems and resources while releasing the carbon that is changing our climate. The stresses created by our population and peak oil are now causing social problems of economic and political crisis. Looking at any one part to the exclusion of the whole is pointless.

First, let’s get this out of the way: Emails prove nothing. Sure, you can look like an unethical asshole who may have committed a felony using government funded money; but all email is, is talk, and talk is cheap.

Now, here is some actual proof that the CRU was deliberately tampering with their data. Unfortunately, for readability’s sake, this code was written in Interactive Data Language (IDL) and is a pain to go through.

NOTE: This is an actual snippet of code from the CRU contained in the source file: briffa_Sep98_d.pro

Just to humor the troll I actually followed your link. I saw no proof of anything, just more stuff taken out of context. The comment "Apply a VERY ARTIFICAL correction" could be in reference to anything. It would, for instance, be entirely typical phrasing for some trial experiment we might make in one of our product designs. It means absolutely nothing, either by itself or as part of the entire code that is described.

I think that you should simply ignore all this climate change stuff - since you're so sure it's not real there is no reason for you to ever think about it again.

For those of us diehards on TOD, tampering with data is so passe. The truth is there no matter how someone has fudged some results, we can still anticipate what will happen.

As a great example of tampering, take a look at oil reserve numbers from many of the OPEC producers. These will go up and down with no rhyme or reason, and accusing them (SA,Kuwait,etc) of data tampering makes no difference. We can still figure out what will happen. The climate skeptics have nothing on us oil depletionists as far as sleuthing is concerned.

That quote apparently was taken out of context, as shown by 2 posters on Watts site. Further down in the code, the "yearlyadj" variable is shown as input to a plot routine, however, this section of the code is COMMENTED OUT. That means, it wasn't used in a computation or plot.

As one who has actually written code, I would think that you might appreciate the link I offered. Your posted comment ignores the fact that the part most pointed to was not used, having been commented out further along in the file. All the hooha over this one file is making a mole hill out of a mountain. Now that you know that and (hopefully) have read the discussion in the link I found, do you agree that there is no indication of a problem in the code?

The person who wrote the code published his work and included reference to the problem, that being a indicated cooling as seen in the tree ring data after 1960. If you still think that was "the Smoking Gun", please tell us exactly what was wrong.

If you were truly concerned about this issue, you would have read the literature on the e-mails and your doubts would have been assuaged because the answers are all very, very simple.

The people at WUWT are hacks. They are not climate scientists, and don't seem to understand the code they are reading - all the more because they are, quite intentionally, taking it out of context.

Go read ALL the responses about the e-mails, then comment if you wish. If you aren't willing to do that, you're just another partisan like those at WUWT. If you do go read them, you will find there is nothing in those e-mails of any import that isn't put there by your fevered imagination.

Just for fun, I'll ask you to name five papers that undermine the basic facts of climate change and anthropogenic effects. HINT: there aren't any. (And that's why we have to discuss ACC - because we're on course for mass suicide.)

BTW, that crap book Leanan linked? Sun output has an effect. It's accounted for. It's just another denialist fantasy. Oh, and the author - Surprise! Surpirse! - is yet another non-climate scientists spouting crap. He's been at it before, and certainly will be again. The sun's influence is one of the easiest to debunk, and it has been. Roundly.

Scroll down to comment 356. Taylor makes the mistake of engaging an actual climate scientist, which Taylor points out himsslf, he is not. (He also mentions this new book.) But, hey, if incompetence blows your dress up, have at it.

Oh, and you might actually read what those actual climate scientists have to say about the sun's role.

Even today Leanan has included a review of Peter Taylor's Chill - which takes the view that the danger we face is Global COOLING.

There does not need to be equivalence in number of pro or con articles. I think that Leanan uses her judgement to find articles of interest to the TOD community. TOD doesn't need to link to one pro article for each con article, no matter the subject.

I think Leanan's judgement is stellar when it comes to finding articles that interest the TOD community, provoke discussion, engage us in analysis, confirm things we think, or challenge our beliefs. I certainly don't agree with everything that is linked to, but that's what makes this such a great site. I think the only thing that is verboten is conspiracy/crazy stuff - but even that slips through in the comments every once in a while.

I've just gotten back to TOD after a year hiatus (baby is now 14 months), and the recent Drumbeats have had more than the normal amount of crazy and stupid that I remember (requiring extra intervention from Leanan).

There's been plenty of sites that have discussed Climategate and why it does not disprove anything about climate change. To me, it falls in the conspiracy/crazy list.

The funny thing is, if the glacial cycle continues, and there is no guarantee it will since it is a relatively new pattern in earthly climate, we will cool. There is some evidence, the previous @ 2k years of long-term declining trend prior to 1850, that we might have been headed toward one. Of course, as jigsaw-ish as the climate record is, it may have just been a non-permanent trend. The Younger Dryas lasted 1,300 years, after all. Still, we are far enough into this interglacial that chilling might have been starting its long-term down trend.

What the nutjobs fail to think about is that a frozen climate is no better than an overheated one. Why would they clamor for such a thing? They also fail to think through that warming stopped that process, thus saving us an icy fate. Then they reverse the mistake by nor recognizing we pumped too much CO2, etc., in the air too fast and have, like someone driving off the edge of the pavement on a road, over-corrected the error.

Worst of all, they fail to consider this interglacial as having been damned lucky in being as stable as it has been since the Younger Dryas and that keeping things a little warmer is GOOD. But only a little warmer. We're heading for a lot warmer. BUT, if we could reign in GHG emissions and stabilize at or near the maximums of the inter-glacials (@300 ppm CO2), we'd have achieved as close to Eden as we are likely to get. We would then possibly override the Milankovitch, etc., cycles and completely skip the next glaciation. That would give us a LONG time to develop the tech/means to survive on this planet regardless of climate changes.

And that, boys and girls, is why we need to keep the carbon in the ground. It is perhaps our best tool in keeping glacial periods from happening. Given that 100 PPM has been enough to push us out of cooling, and that took about half our oil and coal, I'd like to suggest here and now we've got enough for about 2 more cycles. 300k years of Eden!

We could do a lot in that time.

Probably we'll still need to use up some of that as time moves forward to keep climate steady and to keep industry moving, etc. So maybe we only have enough for this one cycle, really. Still we buy ourselves 100k years if we can skip this cycle. 200k if we can skip this and the next. With the clathrates and tar sands, etc., we might be able to use a minimum for societal uses and skip the two glaciations. In all that time, we can probably figure out other ways to stabilize using solar energy, etc., or ways to live in any climate, as previously noted.

This reminds me of a post I made a while back regarding CCS. Thinking really long term, if we are successful in sequestering huge amounts of CO2 underground, far future generations could indeed prevent the next ice age.

Yes, I too appreciate Leanan's hard work, day in and day out, and I'm grateful for the balance I see here: the inclusion of responsible disagreeing viewpoints tempered with her judgment calls when enough is too much.

I think that a discussion of the burning of fossil fuels and future availability relates quite closely with the effects that burning has within a closed system.

There are any number of converging crises coming to a head today. They all are interrelated - economic redepression, peak oil, population, global warming, and attendant spiritual breakdown and militant fundamentalism. The economic threat is what keeps the deniers going. Any thought that BAU is impossible makes them furious... don't bother them with facts. Politicians are no help, because they pander to the lowest denominator, who pays the most cash. Like the BAU folks, their interest is keeping the present system going, even as it sinks.

It is like watching a slow motion train wreck, except it is happening so fast now, and we are all on this train, together. About makes one want to scream!!!

As one might expect, a balanced US federal budget will require significant cuts in Defense, Social Security, and Medicare/Medicaid spending, as these three components make up 60% of the budget. If interest on the debt is excluded, as it's non-negotiable, these three areas make up just over 2/3 of the budget which Congress controls.

I don't expect anyone to implement the particular changes that I recommend, but the thought exercise is important, as it shows likely scenarios that may be forthcoming once other nations and private investors become less willing to loan us money.

As one might expect, a balanced US federal budget will require significant cuts in Defense, Social Security, and Medicare/Medicaid spending, as these three components make up 60% of the budget....
I don't expect anyone to implement the particular changes that I recommend, but the thought exercise is important, as it shows likely scenarios that may be forthcoming once other nations and private investors become less willing to loan us money.

It is interesting how deeply ingrained conservative habits of thought have become in the United States.
A balanced budget will "require significant cuts in Defense, Social Security, and Medicare/Medicaid spending".
Note the definitive word "require".

The other obvious alternative for balancing a budget, increasing revenues by repealing the Bush/Reagan tax cuts for the rich, and returning marginal tax rates to those that prevailed under Eisenhower/Johnson/Kennedy ,etc., is not even part of the discussion or, frankly, considered as a possibility.

Back in 1950 when the top US marginal tax rate was 91% instead of the current 35%, life still went on, nothing ground to a halt, but even considering return to those higher marginal tax rates is somehow outside of public consideration, while predicting draconian cuts in public services has become common.

Peter Taylor: Chill, A reassessment of global warming theory.
In his book Chill, natural scientist Peter Taylor, warns that the world is cooling. Chapters include:

New Ice Age possible and imminent

Cooling catastrophe is here now and is ALREADY dangerous for very large numbers of people who are vulnerable to climate changing

Flawed solutions – the only possible outcome from Copenhagen

Food instability will dwarf with the financial crisis

Fox news: Peter Taylor is a world-respected natural scientist with a 30-year track record of work on ocean pollution, nuclear and chemical risks, biodiversity and renewable energy strategies. He has worked at all levels - with NGOs, government, the EU and the UN.

A single voice of a lunatic one might think but people buying his book and most dangerous Fox new is broadcasting the gospel of this false prophet to a large audience.

Actually, the theory that we have just been in an interglacial period and that - left undisturbed by human influence - the natural forces would soon be driving the earth back into another period of global cooling is not at all crackpot.

The thing is, though, that human factors have now been added to the picture, and that does indeed change things.

Aleklett connects peak oil to Dubai’s current situation in two ways. First, Dubai is a city-state that is heavily dependent on tourist travel, and its many attractions are meant to be enjoyed by people who would travel to Dubai by air. In light of peak oil, a phenomenon Aleklett wholeheartedly believes in, aviation will not be able to expand in the future, and thus Dubai’s economy is in serious trouble.

Secondly, Aleklett points out that huge investments in Dubai’s infrastructure were made based on predictions issued by the International Energy Agency. In their World Energy Outlook five years ago, they foresaw oil production in 2030 to be over 120 million barrels per day, while the outlook in Aleklett’s new report “The Peak of the Oil Age” is closer to 75 million bpd. And though Dubai is certainly the first to have made a mistaken investment based on the IEA’s overly optimistic outlook, they most likely won’t be the last.

As most of us have suspected, those overly optimistic predictions, not just by the IEA but by the EIA, CERA and the like, does far more harm than good.

1. Most importantly the number 1 rule by far is that energy prices are notoriously unpredictable and the shorter the time frame the more unpredictable. That said you should probably ignore all relatively short term predictions, including mine below.

2. I would predict a steady increase in the price of nat gas next year and certainly within the next two to three (at least to 6-$7 mcf). I base this first on a chart I printed off the Oildrum which showed natural gas prices vs. production costs from Jan. 00- mid-January 08(which I manually add to each month). The chart seems pretty rythmical in its pattern and every time gas prices fall well above or well below production costs they have headed back the other way. The prior two dips below production costs lasted about 1 1/2 years before prices began steadily rising back toward above production and we are now slightly after 1 1/2 years from when price fell below procuction cost (around March 08).

The real problem is determining the real cost of production but Credit Suisse (who are no dummys) said with a 10% profit margin it is above $7. Many analysts on Bloomberg Radio, who sound like they know what they are talking about are predicting higher gas prices and many seem to favor nat gas over oil (although I go with oil).

3. In terms of oil prices I think they will be over $100 next year and much higher in 2011. First, because the markets generally anticipate real conditions by at least 6 months and I believe real shortages will likely arise by 2012 or sooner. Second because the world is in a recovery and China and India are growing at gigantic 9% and 6% rates. China is not in a recession and is only now 10% export dependent. They are not going to need the U.S. and the West to consume for them forever or perhaps not even much longer. China just did a stimulus that was larger than the U.S. Stimulus (and much better targeted) and they have a middle class that is larger than the entire population of the United States. They also have a lot of our money to buy and lock up resources around the world.

I also believe it will take well over $100 to make the U.S. consumer begin to change behavior. I believe the U.S. consumer has alreadly acclimated to under $4 gasoline in terms of behavior and it will take a jump beyond that (perhaps to $5) for the next shock- forced change in behavior...But given the amount of shock- forced change in behavior that will be needed as we approach actual physical shortages...prices are likely to climb even higher in the next three years. Finally, the next precipitating event could be a possible attack by Israel on Iran perhaps in March or Spring 2010.

Goldman Sachs (who are no dummies) predict (12/3/09) $90/$110 oil(2010/11) with lower prices at beginning of 2010 and higher at end of 2010 and $6/$6.50 nat gas (2010/11). It is possible they are being conservative because they missed on their $200 a barrel call last year.

But then again there is rule #1 above, so don't necessarily believe me either.

Wallstreet – I’m with you about trying to predict prices. That’s why we don’t. In our economic analysis of drilling deals we use $4 NG and $50 oil. And no escalating prices down the road. And I agree our Swiss cousins are clever (but not that sure about our second cousins at GS). But perhaps their numbers refer to the global market. At current oil/NG prices there are many viable wells that can be drilled in the US right now. We’ll be spending upwards of $300 million over the next several years doing just that. And it will be profitable (actually already has been). There is an abundance of high quality drilling deals in the market place right now. Additionally costs have come way down. It’s the lack of capital that’s holding back most oil companies these days…not the price of oil/NG. This ignores the shale gas plays, of course. They are a different game entirely.

But not a simple relationship though. If oil/NG prices jump soon drilling rig counts will increase. And, thus, so will costs. Fewer quality prospects for sale. And poorer prospect will be drilled and thus efficiency goes down. Typically in the past, boom drilling periods have been the least profitable times overall. Drilling during periods as we have today and then being in position when the price bubbles reappear makes the big bucks. That’s our biz plan. Old but still true: buy low…sell high.

Very interesting figures. But I am guessing your assumptions would likely be conservative because if you are wrong there would be great risk. Also, I assume you are drilling on land? Can you explain what the game is in shale plays? Does anybody really know the marginal cost right now? That seems to be a missing element from the peak energy analysis.

WS -- We do drill some in the bayous and the open Gulf waters. We limit our exposure offshore due to hurricanes. More expensive out there but we have the money. As far as price assumptions we can make money with today's prices. Can still make a profit with a 50% price drop...just not too much though. We don't make assumptions per se about future prices: they'll be what they'll be. It might be hard to understand but we don't tend to even discuss price much. We're focused on the high-end technology that increases our success rate. I mentioned elsewhere that prices don't play as big a role in a company's overall profitability as many might think. That's why so many companies go under when we have high prices. The high prices drives up competition for good prospects. But the high prices allow companies to raise a lot of capital But then they have drill with that money or lose it. So they start drilling riskier projects. I know it sounds simplistic but it is that simple: have $100 oil and $10 NG and you still lose money if you drill enough dry holes. I've dealt with many companies that went out of business. And without one exception they all failed by drilling to many dry holes during high price periods. And some that did make a small initial profit went under/sold out when prices fell...as they always eventually do.

I think I recall you were a trader at one time. If so then you know well how the hype machine works.

Hell WSE...If they sat still while I told them my endless oil patch/geology stories I would pay them.

In your work did you get a front row seat watching the sizzle (as oppossed to the steak) being sold? About 20 years ago a boiler room was set up next to our offices and was pitching an absolutely bogus oil investment. The manager (I swear I'm telling the truth...his last job was selling used cars) didn't hesitate to show us his sales brochure. After all, we were in the oil biz so we had to be crooks too. When I checked with the state attorney general they told me they had already shut down this group. I made them aware of their error. A few weeks later, as my cohorts were sipping their morning coffee in our outer office with a clear view of the elevators, the worker bees of the boiler room started showing up. But their keys wouldn't open the door. During the night the Texas Rangers and Houston PD had the locks changed. Pulled all their paper work out too. Finally the two managers showed up and the Rangers had followed them up. Slapped the cuffs on them. As they were hauled away my guys just stood up, smiled and waved goodby. One of greatest disappointments in life was that I wasn't there that morning.

Only worked for solid companies Dean Witter Reynolds before merged into Morgan Stanley and Citibank Investment Bank which sold institutional products like bonds to major corps. They did sell mortgage backed securities which later became a debacle (but the Govt. had there hands in that one to). Interestgly, I recently saw the FHA was again offering no income check mortgages which were a primary cause of the credit crisis.

If I'm ever looking for a new venture maybe we'll set up an oil patch tour (like a dude ranch) for city slickers.

Looks like James Hansen is doubling down. He must have taken a peek at the ClimateGate emails, software code and programmer remarks (REM). He already knows what's in NASA's closet. If you haven't yet delved into CRU's stuff, I highly recommend it. It's a good read. Each evidence type (emails, code, REM) supports and strengthens the others. We live in interesting times. It's just that the United States, and especially the UK, look more and more like the accounts of the Soviet Union as it was held afloat by b*** s***, black magic and regular doses of mass media propaganda.

"Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket."

— Eric Hoffer (The True Believer: Thoughts on the Nature of Mass Movements)

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